Brent Crude Oil Prices tumbled in recent weeks following the rally observed since the start of the year. On 5 June, oil prices hit a nearly four-month low and fluctuated at similar levels in the following days. On 7 June, oil prices traded at USD 64.1 per barrel, which was 9.7% lower than on the same day last month. Moreover, the benchmark price for global crude oil was 14.8% lower than on the same day last year, although it was up 26.8% on a year-to-date basis. The decline in oil prices mostly reflects slowing economic activity in key economies such as China and Korea. Escalating trade tensions between China and the United States, as well as the prospect of new trade wars between the U.S. and other players including Australia, India and Mexico, have reinforced this trend. On the supply side, record oil production in the United States is also exerting downward pressure on oil prices. The recent fall in oil prices comes despite the reimplementation of sanctions against Iran and OPEC’s strict oil production cuts, amounting to more than two million barrels since the start of the year according to the cartel’s latest report. Against this backdrop, Saudi Oil Minister Khalid al-Falih stated on 3 June that there is growing consensus among producers to extend the current oil cap deal beyond the end-of-June deadline.

West Texas Intermediate (WTI) crude oil prices plummeted in recent weeks and, on 5 June, hit a five-month low. Wti Crude Oil prices traded at USD 54.0 per barrel on 7 June, which was down 12.1% from the same day last month and was down 18.2% from the same day last year. Nevertheless, the price was 19.5% higher on a year-to-date basis. The sharp drop in WTI crude oil prices reflects concerns about the health of global growth and surging production in the United States. In recent weeks, the U.S. increased tariffs on Chinese goods and removed India from its Generalized System of Preferences program, which gives developing economies preferential access to the U.S. market. Moreover, Trump threatened to impose tariffs on Australian and Mexican imports as well as levy all remaining Chinese imports. A sustained increase in trade protectionism could hit global growth and reduce demand for the black gold. On the supply side, the United States continued to pump oil at record levels, pushing down oil prices, and will likely continue to do so in the coming months given that the number of oil rigs rose in the week ending 31 May. In a sign that the oil market is well supplied, the EIA’s latest report showed that oil inventories climbed by 6.8 million barrels for the week ended 31 May.