The prices of oil continued to drop on September 26, 2022, dropping to their lowest levels since January and continuing many weeks of decline as fears of an imminent global recession mount, inflation rates remain considerably high and the strong performance of the US dollar dampens demand.
Crude oil prices dropped to their lowest levels since January on Monday.
The price of international benchmark Brent crude plunged below $85 per barrel for the first time since January. Notably, the Brent futures for November slumped by over 1.5% to nearly $84.51 during early trading, recovering to $85.34 at 9.44 a.m. London time.
The US benchmark, West Texas Intermediate (WTI), plunged to as low as $77.22 per barrel early Monday morning – its lowest level since early January – although it recovered and was trading at $78.57 at 4:52 a.m. Eastern Time.
This drop continues weeks of straight drops in oil prices, which caused both of these benchmarks to plummet to their lowest levels since January on Friday. Wide-ranging fears of a recession and the strong performance of the US dollar have dampened the global oil demand.
The Dollar Index, which determines the U.S. dollar’s value against six other major currencies, hit a 20-year high on September 21, and buyers using other currencies will need to spend a lot more to purchase the same dollar amount of crude oil.
Factors Affecting Oil Prices
Many factors have contributed to dropping oil prices. Apart from the dollar’s strong performance, surging inflation rates and fears of a global economic meltdown have dampened demand. Continuous strict COVID-19 curbs in China, the biggest energy consumer in the world, have also pushed demand down.
The effect of Russia’s invasion of Ukraine, which made energy prices explode, has served to buffer oil prices against fears of recession, although these fears now seem to be the main force driving the market.
