What’s behind the decline in oil prices?

Reports that Ukrainian forces have attacked a military convoy from Russia have pushed up oil prices today, but the bigger picture is that they remain much lower than only a few weeks ago. We suspect that this is due to a decline in the geopolitical risk premium over this period, against a backdrop of ample global supply, rather than a sudden slump in demand. This suggests that oil prices should fall further over the medium term even if the headlines about the world economy start to improve.