Stocks, Economics and Earnings: Live Business News

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Oil prices plunged on Friday, falling more than 2% even as Western leaders sounded the alarm about an impending Russian invasion of Ukraine.

Markets are worried about potential supply disruptions due to the conflict in Ukraine as Russia produces about 10 million barrels of oil a day. But they are also reacting to reports that talks to restore the nuclear deal with Iran are making progress, a development that could bring tens of millions of barrels of oil to the market.

On Wednesday, an Iranian negotiator, Bagheri Khani, tweeted: “After weeks of intense talks, we are closer than ever to an agreement; However, nothing is agreed until everything is agreed. ”

Brent crude, the international standard, fell 2.6%, to $90.53 a barrel. West Texas Intermediate, which hit nearly $96 a barrel on Monday, fell to $89.25.

Richard Bronze, head of geopolitics at Energy Aspects, a research firm, said that markets were “torn between the danger of escalation” of the standoff on the Ukraine-Russia border and what appeared to be is the growing potential for an agreement in indirect negotiations. between Iran and the United States.

For now, the prospect of a deal with Iran appears to be weighing on worries about oil supply disruptions stemming from the conflict between Russia and Ukraine, Bronze said.

Iran has up to 80 million barrels of oil in stock, he said, some being shipped on tankers near Asian markets, ready for sale shortly. Tehran could then increase domestic production to 1.2 million bpd within eight months, bringing significant new supply to the market.

Mr. Bronze said if a deal happens and the oil currently in storage is dumped that could drag prices down, but over time the world will need Iranian oil. However, other analysts say the global market could be oversupplied by the end of the year.

Traders’ calculus can of course change rapidly in the event of war breaking out in Ukraine or if negotiations with Iran fall apart.

When it comes to Ukraine, worries about disruption focus on natural gas rather than oil. Reflecting tight markets and difficult geopolitics, gas prices in Europe are four times higher than they were a year ago, a situation that is putting pressure on households and businesses, such as producers. fertilizers and metal production, which are energy intensive.

About a third of Europe’s natural gas supply comes from Russia, largely through the pipeline network. Some analysts suspect that Russian President Vladimir Putin wants to cut off gas supplies to his most important customers, such as Germany and Italy, but pipelines through Ukraine could become collateral damage. of the fighting, and some analysts fear that Mr. Putin may continue to squeeze energy supplies in retaliation for sanctions imposed by the West.

Analysts believe that Europe can cope with short-term disruptions in gas supplies from Gazprom, Russia’s gas monopoly. Earlier this week, Ursula von der Leyen, President of the European Commission, said at great length, told reporters, “Our models now show that for partial disruption or further reduction in Gazprom’s gas supply, we are now on the safer side.”

But in the event of a longer cutback, Europe may need to take drastic measures. Such changes have occurred in today’s tight market.

The flow of liquefied natural gas, much of it from the United States, has outstripped Russian gas imports to Europe in recent weeks. If Moscow squeezes supplies further, Europe will likely ask other suppliers, such as Algeria, Azerbaijan and Norway, to increase flows, analysts say.

Europe could also take further measures, including restarting shale coal plants and delaying the scheduled closure of nuclear plants in Germany. Henning Gloystein, a director at Eurasia Group, said businesses could eventually be closed and, as a last resort, households could see their energy supply distributed. Stocks, Economics and Earnings: Live Business News

Fry Electronics Team

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