Oil Hits Lowest Since 2021 on Banking Fears

LONDON — On Monday, oil prices fell to their lowest level in 15 months due to concerns that risk in the global banking sector and a prospective hike in US interest rates might cause a recession, reducing fuel demand. 

Brent crude futures for May fell 83 cents, or 1.1%, to $72.14 a barrel by 1425 GMT. The April US West Texas Intermediate oil contract was down 91 cents, or 1.4%, to $65.83 before it expired on Tuesday. 

May futures, which see higher trading volume, were down 1.3% to $66.05 per barrel. 

Brent and WTI fell by approximately $3, reaching lows last seen in December 2021. WTI dropped below $65 a barrel before temporarily returning to positive territory. Last week, both benchmarks lost more than 10% of their value as the financial crisis deepened. 

Despite a historic agreement in which UBS, Switzerland’s largest bank, agreed to purchase Credit Suisse to save the nation’s second-largest bank, the oil price continued to decline. 

After the deal was announced, the US Federal Reserve, the European Central Bank, and other major central banks promised to improve market liquidity and help other banks.

According to a Reuters survey, most economists anticipate that the Fed will raise interest rates by 25 basis points on March 22 despite the current volatility in the banking industry.

However, some executives are urging the central bank to suspend its monetary policy tightening for the time being and be prepared to resume rate hikes in the future.

On April 3, OPEC+, which consists of Russia and other producer allies, will convene a ministerial committee. The group decided in October to reduce oil output objectives by 2 million barrels per day through the end of 2023.

News source: Reuters