© Reuters. FILE PHOTO: A worker inspects a fuel tank at the Nahr Bin Umar oil field in northern Basra, Iraq, March 22, 2022. REUTERS/Essam Al-Sudani
NEW YORK (Reuters) – Oil prices fell at the start of Asian trade on Sunday after the United Arab Emirates and the Iran-aligned Houthi group welcomed a ceasefire that ended military operations on the Saudi-Yemen border, allaying concerns about potential risks. supply problems.
The first drop this week came after oil prices stabilized around 13% last week — the biggest weekly drop in two years — and never happened after President Joe Biden announced the release of the largest U.S. oil reserve.
Futures were down $1.01, or 1%, at $103.38 a barrel by 2223 GMT. WTI crude futures fell 84 cents, or 0.9%, to $98.43 a barrel.
The United Arab Emirates (UAE) welcomed the UN-brokered announcement of a ceasefire in Yemen, the official UAE news agency WAM reported on Saturday. The Iran-aligned Houthi group, which is fighting a coalition including the United Arab Emirates in Yemen, also welcomed the truce.
The national truce, the first in Yemen’s seven-year conflict, will allow fuel imports to the Houthi-controlled area and some flights at Sana’a airport, the UN envoy said on Friday.
“It’s a supply threat, and the ceasefire will reduce that supply threat,” said Phil Flynn, an analyst at Price Futures Group.
Market participants have been concerned about global supplies since Russia invaded Ukraine in late February. Sanctions imposed on Russia after the invasion disrupted oil supplies and pushed oil prices to nearly $140 a barrel, the highest level in about 14 years.
On Thursday, Biden announced the release of 1 million barrels per day (bpd) for six months starting in May, reaching 180 million barrels, the largest release ever from the U.S. Strategic Petroleum Reserve (SPR). ).
On Friday, members of the International Energy Agency pledged at a special meeting to once again coordinate the release of oil, according to Japan’s Ministry of Industry and Commerce.
Still, “when you look at the SPR release, there are still a lot of questions about how they’re going to extract all this oil,” Flynn said. “We will have to wait and see. »
Meanwhile, Russian energy giant Gazprom (MCX) said on Sunday that it will continue to supply to Europe via Ukraine to meet the needs of European consumers.