Oil markets will begin the week with both benchmarks back below $100 amid escalating conflict in Ukraine, following Russia’s brutal invasion of the country.
Brent Crude and WTI Crude slipped on Friday after sharp rises earlier in the session but remain historically high.
Prices are elevated amid increased concern over supply disruptions from sanctions, Kremlin retaliatory measures and conflict-driven shortages.
So far, however, the West has avoided sanctions to energy supplies – with oil production and gas flows remaining unaffected.
Brent Crude dropped 1.15 per cent on Friday to $97.93 after reaching $105 on Thursday, breaking the historic $100 milestone for the first time since 2014.
Meanwhile WTI Crude dropped 1.3 per cent to settle at $91.59 a barrel, after hitting a session high of $95.64.
However, it was still a strong week for both benchmarks.
Brent Crude rose around 4.7 per cent, while WTI was on track to rise about 0.6 per cent
Alongside conflict in Ukraine, markets are underpinned by continued production shortages from OPEC+ and rebounding post-lockdown demand.
The organisation has revised down its forecast for an oil market surplus this year by 200,000 barrels per day (bpd) to 1.1m.
The data, as part of report prepared by the Joint Technical Committee (JTC) for OPEC+ ministers, shows stocks in the developed world standing at 62m barrels below the 2015 to 2019 average by the end of the year.
In a previous forecast it had predicted the stocks would reach 20m barrels above the same average by that point.
Ministers from OPEC and allies led by Russia, a grouping known as OPEC+, will meet on March 2 to decide whether to increase output by 400,000 bpd in April.
Sources from the group told Reuters the output deal is showing no cracks so far after Russia’s invasion of Ukraine, and the group is likely to stick to a planned output rise despite crude topping $100 a barrel.
Data from a separate JTC report, also seen by the news agency, showed the group produced in January 972,000 bpd less than the targets outlined by the deal, compared with 824,000 less in December.
Craig Erlam, senior market analyst at OANDA, anticipated sustained unpredictability in the markets.
He also pointed to US-Iran talks as a potential weight on prices.
He said: “I expect we’ll continue to see plenty of volatility in oil markets for some time, with plenty of interest in the dips as geopolitical tensions remain so high. One thing that could take some heat out of the market will be a US-Iran nuclear deal, which has reportedly been very close for a while now. An agreement could quickly see around 1.3m barrels re-enter the market, which is no doubt a big incentive for getting a deal over the line.”