Oil prices are set to experience their most significant weekly drop since March due to a major downturn in financial markets. This downturn is driven by concerns that interest rates might stay high for an extended period.
This week, Brent crude’s price fell by over 11% – a decrease of more than $10, placing it below $85 per barrel.
The last time it was priced this low was in late August, even though it was valued at over $97 just the previous Thursday.
Since mid-June, oil prices have surged by over 25% after Russia and Saudi Arabia started implementing cuts to global oil supplies.
Nevertheless, the crude price has experienced a sharp fall recently, largely due to growing anxieties about high-interest rates.
Additionally, recent fluctuations in bond and stock markets have raised concerns about global demand.
The rise in US Treasury yields has bolstered the dollar’s value, which means it takes fewer dollars to purchase commodities like oil.
Commenting on the situation, Warren Patterson, the head of commodities strategy at ING, remarked, “The prevailing rates scenario, coupled with the strength of the USD, has introduced even stronger challenges to the market.”
