The geopolitical context remains the key

Crude oil prices fell back a little overnight, but after rising sharply before a potential Russian attack on Ukraine. The price of Brent 1st-nearby touched $95/b, before returning to $93/b. At the initiative of France, the Russian and US Presidents agreed in principle to meet at a summit, the details of which have yet to be defined, on the condition that the US does not take any military action beforehand.

If prices had risen, it was also because the markets were probably disappointed that the negotiations on the Iranian nuclear issue did not lead to an agreement this weekend. The German Chancellor dramatised the situation by saying that this was “the moment of truth” and that failure would be likely if an agreement was not reached immediately. Iranian diplomacy is due to speak this afternoon.

In case the geopolitical risks materialise (attack by Russia and/or failure of negotiations with Iran), the Biden administration would prepare an international plan to make strategic oil reserves available, coordinated by the IEA. These have already fallen significantly, with China, India, Japan, South Korea and the UK accompanying the US in November when they announced the release of 50mb.