A mixed week on the oil market
Originally uploaded on July 15, 2022
It’s been a mixed week on the oil market. Prices slipped as the fears of a global recession began to bite.
Fuel prices are slowly beginning to ease following a turbulent year. After Russia invaded Ukraine in February, oil prices skyrocketed and, in March, we saw the worrying journey up to the high of $139 per barrel.
On Tuesday, we saw prices settle at below $100 per barrel. We could see fears of recession soften the global oil demand, and therefore price, in the shorter term.
However, Dr Fatih Birol, Executive Director of the International Energy Agency, spoke at the Global Energy Forum in Sydney this week. He said that the world has never witnessed such a complex situation regarding global energy. He believes “we may not have seen the worst of it yet.”
He went on to state that the global squeeze on oil won’t be fully realised until the winter and that the potential risk of a spike in oil prices at the tail end of 2022 remains highly likely.
Last week, we discussed the currently turbulent political situation in Westminster, which has now been added to the ever-growing list of issues affecting the economy. With the Conservative party making their first votes for their new leader on Wednesday, we are on our way to finding out who will become our new Prime Minister. However, having a new figurehead may do little to alleviate the current unpredictability of the economy.
As the markets grapple with this political uncertainty, increased COVID cases, the cost of living crisis, and ongoing supply chain issues, predicting what the second half of the year holds for fuel prices remains challenging. We will need to assess the developing situation throughout the year to learn the true wider economic impact.
In the UK, retail fuel prices hold steady at around £2 per litre for diesel. Fortunately, fuel card users may get some welcome relief as they can expect to see a drop for the third week in a row. Those with fuel cards can expect to see a drop of 2ppl over the next week.
If you do not currently use fuel cards and are interested in learning more, please get in touch with our team.