World Oil Prices Fall Following Fears of Global Recession

LONDON, KOMPAS.com – World crude oil prices fell below the level of 100 US dollars per barrel on Wednesday (6/7/2022) local time. Decrease world oil price occurred following growing fears of a global recession.

Collect New York Times, the price of benchmark Brent crude fell 3 percent to 99.61 US dollars per barrel. Likewise, the price of crude oil, West Texas Intermediate (WTI) which decreased 1 percent to 98.53 US dollars.

Louise Dickson, senior analyst at Rystad Energy said that world crude oil prices had risen by 120 US dollars per barrel last month, but in the last two weeks there has been a consistent decline.

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According to him, basically there is no fundamental change in the energy market, however, sales of fuel in the US are experiencing obstacles, along with the slowing economy.

“If a recession hits, and inflation continues to push prices higher, demand for oil will almost certainly decline,” Dickson said.

According to him, in the next few weeks or months, oil prices will depend largely on how deep the recession is, and also how strong China’s demand is when the country begins to emerge from the Covid-19 outbreak.

On the other hand, there is no sign that Russia’s war in Ukraine is coming to an end anytime soon, and despite the tightening of Western sanctions, Russia’s oil exports remain stronger.

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Meanwhile, if Europe is short on natural gas next winter, utilities will be forced to burn more oil, which could hamper supply and drive up crude prices.

In the US, gasoline prices also fell, but the pace of decline was slightly slower as it takes one to two weeks for gas stations to calculate crude oil prices. The national average price for regular gasoline in the US fell 2 cents to 4.78 per gallon, and the average gas price in the US was US$5 per gallon.

Meanwhile, the capacity of US oil refineries is judged to be insufficient in supply as it sends more fuel to Europe as compensation for reduced Russian imports.

Meanwhile, the Atlantic hurricane season, which is expected to head to the Gulf of Mexico, is also feared to cause damage to refineries, which could push up gas and diesel prices.

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