By Adedapo Adesanya
Oil prices plummeted by about 9 per cent on Tuesday, with the Brent crude losing 9.5 per cent to sell at $102.77 a barrel and the United States West Texas Intermediate (WTI) crude falling by 8.2 per cent to $99.50 a barrel after it returned after America’s Independence day holiday.
Both benchmarks logged their biggest daily percentage decline since March 9 and hit share prices of major oil and gas companies amid growing fears of a global recession and lockdowns in China.
Analysts noted that the world’s largest economy – the US, may have shrunk in the three months from April through June which would be the second straight quarter of contraction, considered the definition of a technical recession.
With inflation at multi-decade highs, the pace of policy-tightening is not expected to let up in the second half of 2022 after top central banks raised interest rates in June than in any month for at least two decades,
Mass COVID-19 testing in China stocked fears of potential lockdowns that threaten to deepen cuts to oil consumption.
Weeks after lifting its lockdown, Shanghai said it would begin new rounds of mass testing of its 25 million residents over a three-day period, following a new bout of an outbreak.
During the testing, people living in the affected districts would be required to show a test taken within the last two days to leave their homes, it said.
City lockdowns and repeated mass testing in China, part of its zero-COVID policy that aims to eradicate all outbreaks, have brought case numbers down but many of the measures have fuelled anger and taken a toll on the economy.
Although China’s most populous city has lifted a two-month-long lockdown of its 25 million residents, it still imposes targeted curbs on movements whenever a COVID case is found outside quarantined areas.
OPEC Secretary-General, Mr Mohammad Barkindo said on Tuesday that the industry was “under siege” due to years of under-investment, adding shortages could be eased if extra supplies from Iran and Venezuela were allowed.
On the other hand, the Norwegian government on Tuesday intervened to end a strike in the petroleum sector that had cut oil and gas output and worsened Europe’s energy troubles.
The strike would have cut daily gas exports by 1,117,000 barrels of oil equivalent or 56 per cent of daily gas exports, while 341,000 barrels of oil would have been lost in a week.
