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Monday, May 16, 2022

Oil prices plummet after new wave of Covid lockdowns

Oil prices have hit a five month low following several newly implemented lockdowns.

Countries including the UK, France and Germany have re-introduced tight social restrictions to combat the new wave of infections.

It is feared that this lack of freedom will see the need for transport and thus demand for oil drop dramatically.

The price of Brent crude oil fell as low as $35.74 per barrel, something not seen since May.

Brent is the benchmark for oil prices and has fallen 45% since the start of the year.

US crude Oil has also fallen quickly, by as much as 7% to $33.64 a barrel.

It is speculated that fears over an uncertain election and absence of US fiscal stimulus have led to a negative economic outlook.

“Whichever way you look at it, this coming week will be huge for US and global markets,” said Simon Ballard, chief economist for the First Abu Dhabi Bank.

“We see the potential for a sharp rise in volatility around these events and all in the context of a still deteriorating Covid-19 situation across much of the US, Europe and elsewhere.”

Only China seems to be profiting in these uncertain times thanks to the now increased domestic demand produced by Covid.

China, the worlds second biggest economy reported growth of nearly 5% between July and September, compared to the same time the previous year.

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