Oil prices slide to nine month lows as strong dollar spooks the market
Oil prices crumbled to their lowest levels in nine months this morning, as fears of a looming recession and a resilient dollar exacerbated market fears,
Brent Crude fell to $84.51 per barrel, its cheapest price since January 14, while WTI Crude slipped to $77.21 per barrel.
However, both benchmarks later recovered to stand higher following a volatile day of trading – with investors still waiting for details on potential new sanctions on Russia.
Brent Crude was up 0.6 per cent on Monday evening, trading at $86.75 per barrel, while WTI Crude was 0.74 per cent to $79.48 per barrel.
Current prices are well below this year’s peaks, when Brent Crude climbed to a 14-year high of $139 per barrel, following Russia’s invasion of Ukraine amid subsequent Western sanctions.
Both benchmarks were trading above the $100 milestone for most of the proceeding six months following the rally, but have been on a downward spiral since dropping below three figures in July.
European Union (EU) sanctions banning Russian crude are set to start in December, alongside a plan by G7 countries for a Russian oil price cap looking set to tighten supply.
However, EU countries were struggling to agree to a price cap as some raised objections, pushing prices into positive territory.
Meanwhile, the dollar index that measures the greenback against a basket of major currencies climbed to a 20-year high.
A stronger dollar tends to curtail demand for oil which is priced in the US currency.
There are also concerns of reductions in demand with multiple countries teetering on the verge of a recession.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, are set to meet on October 5 next week, having agreed at their previous meeting to cut output modestly.
However, OPEC+ is producing well below its targeted output, meaning that a further cut may not have much impact on supply.
Data last week showed OPEC+ missed its target by 3.58m barrels per day in August, a bigger shortfall than in July.