While the price at the pump is staying sky high, wholesale oil prices dropped sharply today, trading below $100 per barrel for the first time since the Russian invasion of Ukraine began on February 24th.
While the effects of the price drop may not be readily apparent at the pump for some time, it seems as if the energy industry is taking stock of the current situation and deciding that there is a sufficient supply of oil to drive wholesale prices downward.
Analysts credited the latest round of negotiations between Ukraine and Russia over the war as raising hopes that the conflict will end soon enough to stabilize the future of oil production and delivery. The recent surge in COVID-19 lockdowns in China was also mentioned as suppressing demand for oil as well as causing downward pressure on prices.
“Beside new talks between Ukraine and Russia, I guess new lockdowns in China are the reason for a negative start of the week for crude oil,” UBS analyst Giovanni Staunovo said.
“Oil prices might continue moderating this week as investors have been digesting the impact of sanctions on Russia, along with parties showing signs of negotiation towards (a) ceasefire,” Tina Teng, an analyst at CMC Markets, said.
With prices currently still volatile, it’s uncertain how much today’s drop in oil prices will actually affect what you pay for a gallon of gas at the pump in your state.
One thing is certain, if the price of a gallon of gas does wind up falling, Republicans won’t be clamoring to go on Fox News to blame President Biden for the drop in prices as they have been to blame him for the rise in prices.
Original reporting by CNBC.
Vinnie Longobardo is the Managing Editor of Occupy Democrats. He's a 35-year veteran of the TV, mobile & internet industries, specializing in start-ups and the international media business. His passions are politics, music, and art.