Both major crude benchmarks shed more than $5 a barrel on Thursday, bringing oil prices to levels not seen since before Russia’s invasion of Ukraine as fears of economic recession slowed demand.
Brent, the international benchmark, fell as low as $94.45 a barrel in trading, although it closed at $96.84 on February 23, the day before Russia invaded Ukraine. West Texas Intermediate, the US marker, fell to $90.56, below its close of $92.10 before the invasion.
The price slides added to a broad rout over the past six weeks that has now fully erased the price surge triggered by the war between Russia and Ukraine.
Goldman Sachs analyst, Damien Courvalin, told the FT that the move, “reflects growing concerns over oil fundamentals, both for higher supply and weaker demand.”
Vladimir Putin’s decision to send troops into Ukraine caused prices to soar earlier this year, with both Brent and WTI briefly trading above $130 as western countries retaliated by imposing sanctions on Russia, one of the world’s biggest oil exporters.
But recessionary jitters and the prospect of the US Federal Reserve stifling growth with a rapid tightening of monetary policy have since halted the rise.
Data released on Tuesday by the US Energy Information Administration (EIA) suggested petrol demand had slipped to its lowest level for the current time of year since 1996.
“The weakness of US oil demand indicators does appear to have led to the weakness in prices,” said Paul Horsnell, an analyst at Standard Chartered, noting data had “worsened significantly.
Oil prices have tumbled in the past two weeks on recession concerns despite a drop in crude and refined products exports from Russia amid Western sanctions and supply disruption in Libya.
Aside those, Nigeria continues to lead underperforming nations in terms of oil production, hobbling the plan by the Organisation of Petroleum Exporting Countries (OPEC) to fully return the liquids taken off the market in the height of the Covid-19 pandemic.
Nigeria blames massive oil theft, decaying upstream infrastructure as well as its inability to restart oil wells shut down in the wake of the pandemic in 2020.
Worries of COVID-19 curbs in multiple Chinese cities to rein in new cases of a highly infectious subvariant have also kept a lid on oil prices, a Reuters report stated.
China’s daily crude oil imports in June sank to their lowest since July 2018, as refiners anticipated lockdown measures to curb demand, customs data showed on Wednesday.
President Joe Biden of the United States will Friday fly to Saudi Arabia, where he will attend a summit of Gulf allies and continue his call for them to pump more oil.
However, spare capacity at the OPEC is running low, with most of the producers pumping at maximum capacity, and it is unclear how much extra Saudi Arabia can bring into the market quickly.
Meanwhile, an armed, masked group said to be affiliated with and acting on orders of the Libyan Government of National Unity (GNU) Thursday stormed the National Oil Company (NOC) in an attempt to force long-time head Mustafa Sanella out and install a new board.
Sanella had on Wednesday rejected the prime minister’s authority to sack him, raising the prospect of an open struggle for control of the state energy producer.
Recall that Libya’s messy political situation has already removed 850,000 barrels per day from the market this year through a blockade by eastern factions, underlining the risks to already constricted global energy supply.
“I am present in the corporation and work continues. All the decisions are invalid and your government has expired,” insisted Sanella.
Control over Libya’s oil revenues through the NOC and the central bank has been the biggest prize for warring factions since the 2011 NATO-backed uprising that began years of chaos.
Sanella, who was appointed in 2014 by a previous Tripoli government, has become a key figure alongside central bank governor Sadiq al-Kabir in maintaining the flow of revenue needed to uphold state services during the conflict.
Arguments over which government should access oil revenue have drawn in both the NOC and the central bank.
On Tuesday, the Libyan oil company also said it was resuming exports from two ports closed by an oil blockade and hoped to restart other shuttered facilities soon.
Emmanuel Addeh in Abuja with agency report
from Global – Arise News
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