By Adedapo Adesanya
The international crude oil benchmark, Brent, slid to the $100 mark on Wednesday as investors grew more worried energy demand would take a hit in a potential global recession.
The crude oil grade specifically lost $2.43 or 2.36 per cent yesterday to settle at $100.34 per barrel as the American grade, the West Texas Intermediate (WTI) crude fell by $1.11 or 1.12 per cent to $98.39 per barrel.
On Tuesday, Brent tumbled 9 per cent in what was the third biggest for the contract since it started trading in 1988. Its biggest drop was an equivalent of $16.84 in March while WTI lost 8 per cent.
The oil market opened the third quarter on a volatile footing as concerns about a potential recession rattled investors.
As central banks, including the US Federal Reserve, jacked up interest rates to tame inflation, investors have been pricing in the consequences of a slowdown even as physical crude markets continue to show signs of vigour and the war in Ukraine drags on.
With the US central bank expected to keep raising interest rates, investors are cutting back on risky assets like oil.
Oil prices were also slammed by a soaring US Dollar. The rise in the greenback makes oil expensive for holders of other currencies.
In China, the world’s biggest oil importer, the market is worried that new COVID-19 lockdowns could cut demand as some areas are facing local outbreaks and infections have emerged at the community level in Shanghai.
Meanwhile, China’s crude oil imports from Russia in May soared 55 per cent from a year earlier to a record level.
Russia displaced Saudi Arabia as the top supplier, with refiners grabbing discounted supplies as Western countries sanctioned the country over its invasion of Ukraine on February 24.
Further pressuring oil prices, Equinor ASA said all oil and gas fields affected by a strike in Norway’s petroleum sector were expected to be back in full operation within a couple of days.
The strike could have reduced Norway’s gas exports by as much as 60 per cent and would have pushed already excessive European gas prices even higher.
“Workers are going back to work as soon as possible. We are cancelling the planned escalation,” the leader of the Lederne trade union, one of the striking organizations, said.
