Oil price continued to crash, yesterday, as speculators abandoned the volatile market, while Russia claimed it wants the Iranian nuclear deal to be signed as soon as possible.

This is coming as, again, Nigeria failed to meet the 1.8 million barrels per day oil production quota set by the Organisation of Petroleum Exporting Countries, OPEC, clocking just 1.258m/d production in February, 2022.

Monthly Oil Market Report released by OPEC, yesterday, showed that Nigeria’s oil production last month fell by 10.07 per cent from the 1.399 million barrels per day production level it recorded in January.

In the international scene, Brent crude, the global benchmark, fell about 8 per cent to about $98.87 a barrel, its lowest price since late February. West Texas Intermediate crude, the U.S. benchmark, was down more than 8 percent at $94.43 a barrel.

Over the past week, crude prices have plunged by more than 20 percent, reversing much of the surge that came after Russia’s invasion of Ukraine.

Also, tens of millions residents in provinces and cities including Beijing, Shanghai and Shenzhen are under lockdown amid an outbreak of the Omicron variant of the coronavirus.

Meanwhile, most of the geopolitical premium from Russia’s invasion of Ukraine has been lost in a highly volatile market, which spooked many speculators. Concerns about Chinese demand in view of renewed lockdowns also weighed on sentiment.

Open interest in oil has dropped to the lowest since 2015, after futures exchanges have raised initial margins significantly since Putin’s war in Ukraine began, thus making trading the same amount of oil futures much more expensive.

Moreover, the spike in oil prices and the heightened volatility has led many hedge funds and speculators to close out long or bullish positions. Last Monday, Brent Crude traded below its 21-day simple moving average (SMA) for the first time since Russia attacked Ukraine, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said. “The war premium continues to deflate as speculators head for the hills and after the recent surges in diesel and gasoline have raised some demand concerns.”

Hansen added. Oil was plunging on Tuesday after Russian Foreign Minister Sergei Lavrov said today that Russia is in favour of the Iran nuclear deal resuming as soon as possible.

At the end of last week, the talks about the United States and Iran returning to the 2015 nuclear deal that would allow the Islamic Republic to legitimately export its oil were paused “due to external factors,” said Josep Borrell, High Representative of the EU for Foreign Affairs and Security Policy.

Moscow has reportedly made last-minute demands that the sanctions against Russia over its war in Ukraine do not impede its trade with Iran. It will be recalled that oil prices had shot up after Russia invaded Ukraine, with the price of Brent crude oil hitting a near 14-year high at one point.

But in the past few days, the price of oil has dropped due to a number of factors, including hopes of progress in ceasefire talks between Russia and Ukraine, and also expectations that demand from China will ease as Covid cases there surge.

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