The world witnessed a fall in the oil price by nearly 5%, as the fears related to the crisis in the Banking Sector rose to Fear of recession. Brent crude fell 4.1%, to $74.25 a barrel by 1333 GMT, after reaching $74.01 for its lowest since December 2021. U.S. West Texas Intermediate crude (WTI) fell by 4%, $2.86, to $68.47, having also hit its lowest since December 2021.
The uncertainties rose as the largest investor of Credit Suisse failed to provide financial assistance to the Swiss Bank. According to Tamas Varga of oil broker PVM, “Fears of contagion are clearly gaining traction,” he added, “As a result, the dollar is stronger, and equities are weakening – bad omens for oil.”
The fears regarding crude oil demand also spiked due to the fall of Silicon Valley Bank (SVB) and the demise of other U.S Bank, owing to this drastic slump in the oil demand.
“Credit Suisse and broader banking fears are weighing heavily on sentiment,” Craig Erlam of brokerage OANDA told Reuters. “The outlook is suddenly highly uncertain, and that’s hitting oil prices in the short term.”
There are still hopes for recovery as the Chinese economy gained impetus after the pandemic, as pointed out by the monthly report by the International Energy Agency. OPEC also forecasted an increased Chinese demand for fuel for this year.
The rising unrest and crisis situations in the banking sector have gripped the fuel demands, but with rising uncertainties, the fear of a slump is also encircling other sectors of the economy.
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