At $67, Crude Oil Price on Track for Biggest Weekly Drop

Ejiofor Alike with agency reports

Crude oil prices plunged to $67 per barrel Thursday, losing about five per cent as trade tensions dampened the demand outlook, putting the crude benchmarks on course for their biggest daily and weekly falls in six months.

Reuters reported that oil coursed downward with other global markets as concerns grew that the trade conflict between China and the United States was fast turning into a technology cold war between the world’s two largest economies.

While the trade war is the main cloud over economic growth and demand predictions, market participants also pointed to weakening United States data and overfull US crude stockpiles.

Brent crude futures,

Consequently, the international benchmark, Brent settled down $3.23, or 4.6 per cent, at $67.76 a barrel.

The United States West Texas Intermediate (WTI) crude also dropped $3.51, or 5.7 per cent, to $57.91 per barrel. Earlier, the contract touched $57.33 a barrel, the lowest since March 13.

That was a second consecutive daily decline for the benchmarks. WTI fell 2.5 per cent on Wednesday after government data showed US crude inventories rose last week, hitting their highest levels since July 2017.

Fears of supply disruption amid heightened tensions in the Middle East had earlier overshadowed swelling United States crude inventories and raised crude price above $76.

Crude price was then drawing support from the risk of conflict in the Middle East, with helicopters carrying US staff from the US embassy in Baghdad last week out of apparent concern over perceived threats from Iran.

Saudi Arabia’s Deputy Defence Minister, Prince Khalid bin Salman, a son of King Salman, had also accused Iran of ordering an attack on Saudi oil pumping stations that Yemen’s Iran-aligned Houthi militia had claimed responsibility for the attack.

Tehran had also reportedly denied providing arms to the Houthis.

The drone attack reportedly happened two days after four vessels, including two Saudi oil tankers, were damaged by sabotage off the coast of the United Arab Emirates.

The other ships were a Norwegian-registered oil products tanker and a UAE-flagged bunker barge.

All these attacks took place against a backdrop of United States-Iranian tension following Washington’s decision this month to try to cut Tehran’s oil exports to zero and beef up its military presence in the Gulf in response to what it called Iranian threats.

Though the tensions have pushed up oil prices, a rise in US crude oil inventories to their highest since 2017 helped to cap prices.

Also keeping prices in check is uncertainty about whether the Organisation of the Petroleum Exporting Countries (OPEC) and other producers will continue supply cuts that have raised oil prices by more than 30 per cent so far this year.