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📉 Oil falls − time to buy⠀
🛢️ Both reference benchmarks are actively declining due to geopolitical factors. The most relevant of them is the lifting of the oil embargo on Venezuela and problems with Asian demand due to Beijing's position in relations with Russia. Also exacerbates the situation in India's willingness to buy Russian oil at a serious discount and new lockdowns in China due to another outbreak of coronavirus.
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The US has warned China against providing military or financial assistance to Moscow, especially since Saudi Arabia is considering direct sales to China in yuan. Nevertheless, India is trying to keep its key trading partner and is ready to buy Russian raw materials in almost any volume. Of course, at «special», very loyal prices.
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The lifting of sanctions will increase the supply of oil from Venezuela to the United States and (partially!) аlleviate the shortage of supply on the domestic market caused by the energy embargo against Russian suppliers. But this scheme does not fully compensate for the lack of raw materials.
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The pain point of the market remains the Russia-Ukraine conflict, but even if a ceasefire agreement is reached, the market will demand higher prices. In the context of active hostilities, European sanctions pressure is increasing, so that the threat of unstable supplies of Russian raw materials remains. Biden will travel to Brussels next week to once again discuss the situation with NATO leaders, but a sharp change in the views of European partners is unlikely.
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The most sceptical analysts are sure that very soon oil supplies from Russia will be reduced by 50%, which will provoke a serious supply crisis and send oil above $150 per barrel.
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Also, a growth factor can be considered a pause in negotiations between the US and Iran on the resumption of the nuclear deal. Recall that without a new agreement, Tehran will not be able to increase the supply of raw materials to the world market and compensate for the potential shortage of supply. So we consider the current price levels as a technical correction and get ready to open buys.
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Profits to y’all!