This week oil prices have come under continued pressure from the crisis in the Western banking sector, which has seen the downfall of tech startup-focused Silicon Valley Bank and the takeover of embattled Credit Suisse by Swiss rival UBS.
In the span of two weeks in which global oil prices have slipped by 10% following a barrage of damaging economic news and consecutive interest rate rises by both the US Fed and Bank of England will add some further downward pressure on oil prices.
Citing “banking stress, recession fears, and an exodus of investor flows,” analysts at Goldman Sachs on March 18 cut their oil price outlook, now expecting Brent prices to hit $94 per barrel in the upcoming 12 months and $97 per barrel over the second half of 2024 — compared with previous projections at $100 per barrel + for both periods.
Of course, questions linger over the potential demand boost from a reopening China — the world’s largest importer of crude oil, whose buying was reined in for much of last year by Covid-19 restrictions.
Paris-based watchdog the International Energy Agency said in the March issue of its monthly Oil Market Report that it expects world oil demand growth to “accelerate sharply over the course of 2023,” seeing “rebounding air traffic and the release of pent-up Chinese demand dominate the recovery” which is likely to increase oil prices in the second of quarter of this year.
The supply picture has stayed very much muddied by Russia, whose oil flows have been choked by Western sanctions implemented against its seaborne crude and oil products in December and February, respectively. Moscow announced a unilateral 500,000 barrels per day cut in its crude output in March, announced by Deputy Prime Minister Alexander Novak on Feb. 10.
Nevertheless, this week’s fall will be welcome news for fuel card holders who can expect a fall in the region 1 pence per litre as we head into the final week of March.
Don’t forget British summer time begins this weekend so put your clocks forward 1 hour on Sunday. Oil prices drop due to the banking crisis.
