Crude oil prices have been at their lowest since the start of the Russian war of aggression. Prices are falling because the feared slowdown in economic growth would cut demand.
Crude oil prices have been at their lowest on Friday since Russia started its war of aggression in Ukraine in February.
The North Sea Brent futures price was at USD 94.2 per barrel at 16:00 Finnish time. At the same time, US WTI quality futures were at $88.58 per barrel. Prices were last as low just before the start of the Russian war.
The world market prices of crude oil are falling, as worries about a looming recession and the subsequent slowdown in fuel demand have continued and spread.
Recession fears reared their heads more violently on Thursday, when the British central bank, the Bank of England, reported predicting that the country will sink into a long recession this year. The bank estimates that the recession will start in the last quarter of the year and last until the end of next year.
“Everyone clearly takes the threat of recession much more seriously, because the market is still very tight and the producers do not have the capacity to change the situation”, market analyst from the Oanda analysis house Craig Erlam tells news agency Reuters.
The market austerity means that countries that produce oil and export it to other countries have not increased their production. The drop in prices is therefore not due to the fact that there is more oil available than demand. It is also not in sight that production would be increased in the near future.
This week, the Organization of the Petroleum Exporting Countries (Opec) and its allies (Opec+) was said to increase production by 100,000 barrels per day since September.
“It is so little that it is insignificant. From a physical standpoint, it’s a marginal drop. As a political gesture, it’s almost an insult”, head of energy, climate and sustainable development at the consulting company Eurasia Group Raad Alkadiri stated at the time.
The insult was seen coming from the direction of Saudi Arabia to the United States, whose president Joe Biden had been trying to get Saudi Arabia to increase oil production.
The oil market can be significantly swayed by the import ban that the European Union has imposed on sea transportation of Russian oil, which will come into force in December. The EU Commission estimates that 90 percent of Russia’s oil exports to Europe will cease by the end of the year.
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