Oil prices continued to fall on Monday morning, with both Brent and WTI dropping to their lowest levels since January. The collapse in oil prices, which started on Friday, was driven by fresh U.S. recession fears due to a weak July payrolls report.
Demand concerns from China have been weighing on oil prices for quite some time, and fears of a recession in the U.S. will only add to the downward pressure on oil prices.
Concerns over the U.S. economy reverberated around the world, with Asian stocks tumbling and the Nikkei posting its largest-ever decline, eclipsing the crash in October 1987 following Black Monday in New York.
While demand concerns are driving oil market sentiment, geopolitical risks remain very real. Israel is currently preparing for a potential retaliatory attack from Iran, with the U.S. sending defensive reinforcements to the region. The U.S. embassy in Lebanon has urged citizens to leave the country as soon as possible, further highlighting the risk of escalation in the region.
At the time of writing, WTI had fallen by over 2.38% to $71.77 and Brent had dropped by 2.08% to $75.21. Oil markets look set for yet another week of high volatility as demand concerns clash with rising geopolitics risk.
By Josh Owens for Oilprice.com
More Top Reads From Oilprice.com
Josh Owens is the Content Director at Oilprice.com. An International Relations and Politics graduate from the University of Edinburgh, Josh specialized in Middle East and… More
Comments
Unfair narrative.
It's elastic right.
China will be buying.
Mike
Meanwhile, geopolitical risks and fears of an impending retaliatory attack from Iran against Israel and the US sending military reinforcements to the region are all causing volatility in prices and jittery in the global market.
Two other factors leading to declining oil prices are deliberate manipulation of the market by the United States to depress oil prices in a presidential elections' year and the markets waiting for OPEC+'s response to declining prices whether it will make additional cuts or alternatively extend the current ones beyond the end of September.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert