Crude oil rates below USD 100 per barrel after a fall for two successive day

Washington: Fear of global recession and increasing spread of Coronavirus caused a fall of about 10% in the crude oil rates in two days. The fall has brought the crude oil rates below USD 100 per barrel level. This is the first decline in crude oil rates since the start of the Russia-Ukraine conflict at the end of February. Leading financial institute Citigroup has predicted that if developed countries like the United States and Europe are hit with a recession, the crude oil rates will come down to USD 65 per barrel by the end of this year.

The crude oil rates flared up in the international markets after the start of the Russia-Ukraine conflict at the end of February. The Russian crude oil exports were affected because of the sanctions imposed by the western countries. This took the crude oil rates to USD 128 per barrel in March. As the spate of sanctions continued, Russia warned to reduce the production and export of crude oil. Leading financial institution JP Morgan Chase had recently warned that if Russia takes this decision, the crude oil rates will skyrocket to a whopping USD 380 per barrel. But signs of recession have been observed in leading countries, including the western countries, in the last few days. Many global financial institutions, including the International Monetary Fund and World Bank, and economists, have expressed fears that the record inflation and measures being taken against it will also affect the emerging economies and developed countries. At the same time, the World Health Organisation has pointed out that the number of Coronavirus cases is on the rise in Japan, South Kora and China, along with western countries. The oil demand is declining because of this and hence the decline in crude oil rates.

The crude oil rates declined for two successive days on Tuesday and Wednesday. The rate of Brent Crude declined to USD 97.31 per barrel, and the US WTI Crude fell to USD 99.70 per barrel. This is the lowest since March. A leading financial institution has warned that the decline will continue if the recession hits the western countries. As per the Citigroup report, the crude oil rates will come down to USD 65 per barrel by the end of this year and may come down to USD 45 per barrel in the next year.

Meanwhile, International Energy Agency (IEA) said that the revenue from oil sales is increasing for Russia, while crude oil rates are declining in the international market. The IEA noted that Russia earned more than USD 20 billion in June from crude oil sales. IEA clarified that this is an addition of USD 700 million compared to May’s revenue.