Brent, WTI Crude Prices Drop as New British PM Names Cabinet

By Adedapo Adesanya

It went from good news to bad news for top listed oil types at the global crude oil market as prices fell from the previous day amidst looming tension in the political sphere.

The West Texas International (WTI) Crude Oil dropped 1.66 percent or an equivalent of 94 Cents to trade at $56 per barrel on Wednesday.

The Brent Crude also followed as it went down by 72 Cents or 1.13 percent to trade at $63 per barrel yesterday at the market.

However, the OPEC Basket remained static at $64 per barrel.

For the Nigerian Bonny Light, the price went down by 13 cents, equaling a 0.20 percent fall to trade at $64. Also other Nigerian crude like the Brass River and Qua Iboe both gained 48 Cents, an equivalent of 0.74 percent to trade at $65 per barrel each.

Following the Iran-Britain situation, most people believe a diplomatic solution is still the most likely outcome. However if Iran did close the strait (which it has not so far threatened to do) it would “drive up oil prices significantly”, says David Balston, head of the UK Chamber of Shipping.

“There are oil terminals outside of the Gulf but they are limited so you would have to find markets elsewhere.

“It would significantly push up petrol and gas prices in the UK,” he adds, because 5% of the country’s oil and 13% of its natural gas passes through the Strait of Hormuz.

And without a diplomatic solution, it would be likely to spark a “military response” from Western allies, he says.

It was also reported that investors are looking at the “fundamentals” in the oil market, which aren’t very healthy. The Chinese economy is slowing down so demand from the world’s second largest consumer of oil could slip.

Attempts by the Organization of the Petroleum Exporting Countries (OPEC) such as Saudi Arabia, along with Russia, to prop up prices by cutting output have largely failed because of a vast increase in US production.

New British Prime Minister, Mr Boris Johnson, is taking the helm with an urgent crisis brewing in the Gulf, where Iran’s seizure of a British oil tanker threatens to pull the UK and the international community into the escalating friction between Washington and Tehran.

Business Post reports that shortly after he was given permission by the Queen to form a government, Mr Johnson announced Mr Sajid Javid as chancellor, while Priti Patel was named the Home Secretary and Dominic Raab as Foreign Secretary.