Oil prices became sharply lower on fears recession will diminish demand

Crude oil

Oil prices became sharply lower on Tuesday, lower than most in almost four months, as a wide sell-off in commodities markets reflected the fear that a financial downtrend will reduce fuel demand. Brent crude fell by 9.5 per cent , $102.77 a barrel, a price that wasn’t seen since early May. More futures contracts like silver, wheat and copper and stock markerts dropped as well. Oil prices are expected to recover as reserves remained tight.

Due to Russia invasion of Ukraine, Oil prices hit higher than 100 USD a barrel the first months of this year as worries that a strong recovery in fuel request from the pandemic was leaving behind producers’ ability to increase stocks. But prices have fallen this past month due to the worries that global central bank monetary tightening politics to fight the inflation could cause a recession that would damp oil demand. Since the start of June, prices of Brent is cheaper than 20 USD per barrel. This has caused US and European leaders to call on global oil producers to expand supply.

Joe Biden has arranged to visit Saudi Arabia this month as he tries to adjust relations with them, he also has called on Saudis and others alliance of oil producers to increase supply. Meanwhile Boris Johnson on Monday made calls for more crude output, saying that the Saudis “need to produce more oil, no question”. US gasoline futures was bearish on Tuesday, their lowest since April. The prices of oil becoming sharply lower,made the shares of big companies tumbling.

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