Brent Crude Price Drops To $75 From $86 High
The international oil benchmark, Brent crude, fell by more than two per cent on Tuesday on signs of rising supply and concerns that global economic activity and fuel demand would be hit by a deepening United States-China trade dispute.
Brent, against which Nigeria’s oil is priced, had early this month hit a new four-year high of $86.74 per barrel, fuelled by concerns about a shortfall in global supply as US sanctions whittle away at Iranian crude exports.
On Tuesday, Brent crude fell by $2.25 a barrel to a low of $75.09 before recovering slightly to around $75.89 as of 8:10pm Nigerian time.
Oil has been caught in the global financial market slump this month, with equities under pressure from the trade conflict between the world’s two largest economies, according to Asian Oil & Gas.
The International Energy Agency on Tuesday said that high oil prices were hurting consumers and could dent fuel demand at a time of slowing global economic activity.
“There are two downward pressures on global oil demand growth. One is high oil prices, and in many countries they’re directly related to consumer prices. The second one is global economic growth momentum slowing down,” IEA chief, Fatih Birol, told an energy conference in Singapore.
Consultancy, JBC Energy, said the oil price weakness was “probably driven by the wider negative market sentiment amid speculation about additional US tariffs on Chinese imports, should upcoming talks fail to produce the desired results.”
Oil is also under pressure from rising output by the world’s biggest producers, Russia, the US and Saudi Arabia, which are helping to replenish global oil inventories after more than a year of stock draws.
The US is set to impose new sanctions on Iranian crude from next week and exports from the Islamic Republic have already begun to fall.
But there appears to be no significant shortage of crude. Saudi Arabia and Russia have said they will pump enough to meet demand once US sanctions are imposed.