WTI experiences sudden drop, tumbles below $110 as Zelenskyy hints at compromise, on bearish OPEC updates

Front-month WTI futures saw a sharp, sudden drop in recent trade, falling from the $116/barrel area to print daily lows in the $104/barrel area in a matter of minutes, before recovering to around $110 once more where it now trades down over $14 on the day. Ukrainian President Volodymyr Zelenskyy in an interview with the German press said that Ukraine is prepared to make compromises with Russia if they do as well and that he aims to end the war. Meanwhile, the UAE's ambassador to the US gave a statement saying the country is going to push for a larger OPEC+ oil output hike with prices at multi-year highs. The Iraqi oil minister was also recently on the wires, noting that the country was prepared to up output if OPEC requires it and has spare capacity of about 6%. 

Thursday's meeting between the Ukrainian and Russian Foreign Ministers in Turkey will be closely scrutinised, with any signs that a ceasefire to the war in Ukraine might be in the offing likely to further batter oil prices. The logic is that a swifter end to the war in Ukraine could mean a swifter end to sanctions on Russian energy exports, thus a reduction in concerns about the global supply/demand deficit. Whether or not there is a swift end to the war (which it remains far too soon to bet on with Russia and Ukraine still a long way apart), its another thing to bet on a swift end to Western sanctions on Russia. As far as NATO member states are concerned, any Vladimir Putin led-Russia remains a pariah state.

As for bets for a swifter lift to OPEC+ output, that seems to make more sense. Most OPEC+ nations likely view oil prices at current levels well above $100 as not ideal or sustainable for the global economy. But OPEC nations don't exactly have a large amount of remaining space capacity. There are question marks regarding whether Saudi Arabia, the UAE, Venezeula, Iran and other can make up for lost Russian output. For now, WTI well above $100/barrel likely continues to make sense.