The Iran factor seems to outweigh the Russian risk

Oil prices are almost stable, subject to two opposing forces. The price of Brent 1st-nearby seems to be trending very slightly downwards and is trading around $92.3/b this morning. It is notable that a US official’s warning of an imminent invasion of Ukraine by Russia and conversely a meeting between US and Russian diplomatic chiefs next week had little or no impact on oil prices.

A geopolitical risk premium remains, to be sure, but the market seems increasingly focused on the prospect of a return of Iranian oil if a nuclear deal is signed soon. However, rising margins on oil products and low inventories are boosting refinery activity, particularly in Asia.

This explains why crude prices remain so high, even though the market does not seem to really believe in a tipping point in the war between Russia and Ukraine and the probability of an increase in Iranian exports of at least 1mb/d has increased significantly.