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Brent crude oil prices fell below $70 for the first time in three years, driven by OPEC’s downward revision of demand forecasts and weakening global demand, particularly from China.
Brent crude oil prices have dipped below the $70 per barrel mark for the first time in three years, a significant development in global oil markets. On Tuesday, Brent crude was trading at $69.08 per barrel, the lowest level since December 2021. US crude oil prices also declined, dropping to $65.82 per barrel, marking the lowest level since May 2023.
The sharp drop in prices is primarily driven by OPEC’s recent downward revision of its global demand forecasts. The Organisation of the Petroleum Exporting Countries (OPEC) has now lowered its expectations for oil demand in 2024 and 2025, citing weaker economic conditions and slowing demand, particularly in China. This marks the second time in just two months that OPEC has revised its forecasts downward, signalling concern about the global economy's ability to absorb current oil production levels.
OPEC has reduced its forecast for global oil demand growth in 2024 to 2 million barrels per day (bpd), down by 80,000 bpd from its previous projection. For 2025, the group now anticipates a demand increase of 1.7 million bpd, 40,000 bpd lower than earlier estimates. These revisions are a response to declining demand in China, the world’s largest importer of crude oil, where economic recovery remains sluggish.
OPEC had already adjusted its forecasts in August 2023 due to weakening demand in China, and this latest revision reflects a growing uncertainty in the global economic outlook.
The recent decline in oil prices comes after a period of volatility in the oil market. Brent crude oil and US crude experienced their worst performance since October 2023 last week, as bearish sentiment dominated the market. Factors such as concerns over a global economic slowdown, persistent inflation, and a potential slowdown in the Chinese economy have all contributed to the decline in oil prices.
However, oil futures experienced a brief recovery on Monday as markets responded to concerns over Tropical Storm Francine, which threatened oil production and refining activities along the Gulf Coast. The storm's potential disruption to US oil infrastructure temporarily buoyed prices, though this upward momentum proved short-lived.
The fall of Brent crude oil prices below $70 per barrel signals significant challenges for the oil market, driven by OPEC’s revised demand forecasts and weakening global economic conditions. As the global economy continues to show signs of fragility, particularly in key markets like China, the Brent crude oil share price remains highly susceptible to further fluctuations in the coming months. Oil traders and investors will likely remain cautious as they assess ongoing market developments.
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