Oil barrels toward its worst annual performance since the pandemic as Russia feels the pain

Core Viewpoint - Oil prices are experiencing their steepest annual decline since the Covid-era crash in 2020, primarily due to fears of a supply glut and economic pressures on Russia from sanctions and discounts [1][7] Supply and Demand Dynamics - The supply-demand imbalance has significantly impacted oil prices, overshadowing geopolitical tensions that could have otherwise supported crude prices, such as US strikes on Iran and blockades on Venezuelan oil tankers [2] - The lack of volatility in oil markets this year is attributed to fatigue over geopolitical events and rising expectations of a supply surplus later in the year [3][2] Impact on Russia's Economy - Persistently low oil prices have intensified the effects of Western sanctions on Russia following its invasion of Ukraine, with discounts on Russian oil reaching historic highs [4] - Russian crude is being sold at discounts of $20 to $30 per barrel below Brent prices, marking the widest gap since early 2022, leading to a 50% drop in oil export revenues measured in rubles [5] - Russia's GDP growth has slowed to 0.6% in Q3, down from 1.1% in Q2 and 1.4% in Q1, with forecasts for future growth being revised downward [6]