Oil prices fall by more than two percent amid fears of oversupply

Oil prices fell by more than two percent at settlement, on Friday, as investors evaluated the possibilities of increasing global oil supply, a decline in the geopolitical risk premium, in addition to anticipating possible developments regarding reaching a peace agreement in Ukraine.

Brent crude futures fell by $1.60, or 2.57 percent, to record $60.64 per barrel upon settlement, while US West Texas Intermediate crude fell by $1.61, or 2.76 percent, to reach $56.74 per barrel.

Oil prices are heading towards recording their largest annual losses since 2020, despite the limited recovery they witnessed during the past sessions, supported by the disruption of some supplies, after they touched their lowest levels in about five years in mid-December.

Brent crude oil recorded a decline of about 19 percent since the beginning of the year, while American crude fell by about 21 percent, amid fears of a possible glut in supply during the coming year as a result of the rise in crude oil production.

In this context, the International Energy Agency indicated in its monthly report issued in December that the global supply of oil may exceed demand by about 3.84 million barrels per day during the next year.

Investors are also closely awaiting developments in the political track of the Ukrainian crisis, as it may lead to reaching a peace agreement and the return of Russian oil to the markets, which may affect the market balance and crude prices in the future.