This week, weak global economic data and persistent fears of a widespread recession weigh heavily on oil prices. Nonetheless, the wholesale price of oil has continued to fall to its lowest levels since Russia’s invasion of Ukraine in February.
In regard to this six-week drop, Luke Bosdet, a fuel price spokesperson at the AA, has said: “Wholesale petrol’s trajectory, if sustained, would lead to savings from the record highs. Drivers are likely to fork out £10 less a tank in the coming weeks as wholesale prices continue to fall.”
However, this comes alongside a continual struggle in Europe to confirm a steady long-term gas and oil supply. In our previous blogs, we talked about how the huge price increase earlier in the year was driven by the war in Ukraine affecting the supply chain for oil and gas. On Monday, the fallout of this war led to the Russian company Gazprom telling its European customers that it could not guarantee gas supplies, which in turn is highly likely to cause supply disruption in the autumn and winter months as demand increases.
David Cox, an independent energy analyst, has warned that, despite the latest drop, prices are likely to remain high as the war shows no sign of abating. “It’s difficult to see how crude does anything but go up, while the war rages, and that’s not good news in the medium term for petrol prices,” said Cox.
This landscape has not been helped by Monday’s news that efforts to get Saudi Arabia to increase their oil supply, led by US president Joe Biden in a meeting at the start of the week, have proven futile. Since this news, oil prices rose again. They went from $106.27 per barrel on the 18th to $107.35 on the 19th, before settling at an average of $103.86 today.
In the middle of the week, the crown prince of Saudi Arabia Mohammed bin Salman spoke with Russian President Vladimir Putin over the phone to discuss OPEC+ and the oil market. The hope is that OPEC+ as a whole will be able to increase its production to meet its targets, which will allay fears over short supply in the winter and soften prices. However, we will need to monitor how the currently turbulent and challenging situation develops.
