Adedapo Adesanya
By Adedapo Adesanya
Oil prices went down by 1 per cent on Monday as worries about a slowing global economy and possible interest-rate hikes in the United States outweighed supply cuts.
Brent crude futures depleted by 1 per cent or 76 cents to $74.65 a barrel, and the US West Texas Intermediate (WTI) crude futures shrank by 1.2 per cent or 85 cents to $69.79 per barrel.
Earlier in the session, the market was up after Saudi Arabia on Monday said it would extend its voluntary cut of one million barrels per day for another month to include August, while Russia also said it would cut down exports.
Shortly after the Saudi announcement, Russian Deputy Prime Minister Alexander Novak said Moscow would cut its oil exports by 500,000 barrels per day in August.
The cuts amount to 1.5 per cent of global supply and bring the total pledged by OPEC+ to 5.16 million barrels per day.
Later on Monday, Algeria said it would cut oil output by an extra 20,000 barrels from August 1-31 to support efforts by Saudi Arabia and Russia to balance and stabilise oil markets.
The nations, which all belong to the Organisation of the Petroleum Exporting Countries and its allies known as OPEC+, pump around 40 per cent of the world’s crude oil and already have in place cuts of 3.66 million barrels per day, amounting to 3.6 per cent of global demand, including 2 million barrels per day agreed last year and voluntary cuts of 1.66 million barrels per day agreed in April and extended to December 2024.
US inflation continued to outpace the central bank’s 2 per cent target, stoking fears of more rate hikes.
This was reflected in US consumer spending, which weakened in May as households cut back on purchases of manufactured goods amid higher borrowing costs, suggesting that the world’s largest economy lost some speed in the second quarter.
Higher US interest rates could strengthen the Dollar, which makes oil more expensive for buyers holding other currencies.
Prices also moved lower after business surveys showed global factory activity slumped in June as sluggish demand in China and in Europe clouded the outlook for exporters.
