The oil market looks very different today than when Russia invaded Ukraine a year ago. The resulting war has killed tens of thousands of people and driven Europe’s biggest refugee crisis in decades.
The ominous signs of a long-term conflict began last February when Russian President Vladimir Putin announced the invasion of Ukraine. The decision to go to war drew a sharp response from the West, which imposed extensive financial and trade sanctions.
But the Western response did not end the war, which is still going strong. The United States, as well as its European allies, have provided military hardware and cash to support Ukraine’s efforts against Moscow.
In the face of a growing conflict, the global oil market has been under pressure as OPEC nations and others cut output. That has strained supplies and lifted prices.
One year on, the oil market is looking very different than when the Ukraine war began, according to a new report from RBC Capital Markets. The report suggests that the invasion has caused a major change to how the oil market historically sourced barrels.
As a result, the market has been pushed into a tighter stance than it has been since 2008, when the oil price peaked. It also means that global flows of this crucial commodity have been altered, and may continue to do so in the future.
The IEA agreed on two occasions this week to release emergency oil reserves to reduce the strains on markets and send a unified message that there will be no shortage of supplies as a result of Russia’s invasion. In the first collective action, IEA member countries committed to release 62.7 million barrels of emergency reserves and on 1 April, they agreed to make a further 120 million barrels available.