- US
oil prices could drop to $70 a barrel if the political crisis betweenRussia andUkraine eases, said asset manager DWS. - Russia has deployed more than 100,000 troops on Ukraine's border.
- WTI oil on Tuesday traded above $89 a barrel and this year has hit highs not seen since 2014.
US oil prices could slide back by more than 20% from current levels if investors see tensions between Russia and Ukraine subside, said German asset manager DWS.
$4 this year has surged by nearly 19%, recently surpassing highs not seen since 2014 as global oil investors monitor Russia's $4 to Ukraine's border. The Kremlin under the direction of President Vladimir Putin is demanding, among other things, that NATO not accept membership of Ukraine and other former Soviet nations.
The crisis has helped push WTI oil to a high this year above $93 a barrel, a level not seen since August 2014. On Tuesday, WTI settled down 2.15% at $89.36 a barrel on the prospect of more oil exports coming from Iran as the US resumes indirect nuclear talks with the Middle East nation and OPEC member.
"With WTI close to $90 now, we think it's nearly $20 over-priced, which rightfully compensates for the geopolitical risks at the moment," wrote David Bianco, chief investment officer for the Americas at DWS Group, in a note Monday.
"But if the Russia-Ukraine conflict ebbs or with new status quo, we think WTI oil prices will revert back to close to $70," he said. A fall to $70 would represent a decline of 22%.
DWS said it likes to look at crude oil adjusted for inflation and the US dollar. And on that basis, the average WTI oil price since 1973 is $67 a barrel.
Oil prices this year have also stepped higher on stronger global demand for the commodity partially as the Omicron variant of coronavirus hasn't resulted in massive stoppages of work and other social activities worldwide.
$4 the international benchmark, recently pierced through $92 a barrel and on Tuesday fetched about $91 a barrel.