As investors balanced continuing demand worries against constrained global supply, Brent oil futures fell more than 2% to below $87 per barrel amid rising economic uncertainty.
Market analysts noted that a deteriorating outlook for global demand has been keeping markets on edge, with advanced economies—primarily the US and Europe—observing a decline in economic activity due to tightening financial conditions and China—the world’s top importer of crude—possibly facing tighter coronavirus-induced restrictions in the wake of rising infections.
China has experienced a rise in COVID-19 instances, which compelled Beijing to implement a zero COVID-19 virus policy in order to address the pandemic head-on.
The possibility that the Organization of Petroleum Exporting Countries (OPEC) may further interfere in markets to sustain prices in the event of a demand decline brought on by a recession has been encouraging for the supply side.
Saudi Arabia, the de facto leader of OPEC, has told investors that it is prepared to further lower output in order to balance supply and demand if necessary.
Concerns about reduced supplies were further heightened by an EU embargo on Russian crude imports beginning on December 5 and a pending G7 price ceiling on Putin’s oil.
Similar to this, investors balanced continuing demand concerns against constrained global supply and drove down West Texas Instrument (WTI) crude futures by more than 2% to below $79 per barrel. # Brent Price Drops Below $87 Due to Supply Fears.
