Oil prices continued to plummet on Monday, plunging to their lowest levels since January and continuing weeks of decline as fears of a looming global recession mount, inflation rates remain historically high and the strong performance of the U.S. dollar dampens demand.
The price of international benchmark Brent crude slipped below $85 a barrel for the first time since January on Monday morning.
Brent futures for November slipped more than 1.5% to around $84.51 during early trading, recovering $85.34 at 9.44 a.m. London time.
West Texas Intermediate (WTI), the U.S. benchmark, dropped as low as $77.22 a barrel early Monday morning—its lowest level since early January—though it recovered and was trading at $78.57 4:52 a.m. Eastern time.
The drop continues weeks of straight declines in oil prices, which caused both benchmarks to fall to their lowest levels since January last Friday.
Widespread fears of a recession and the strong performance of the U.S. dollar have dampened global demand for oil.
The Dollar Index, which measures the U.S. dollar’s value against six other major currencies, hit a 20-year high on Wednesday and buyers using other currencies will have to spend more to buy the same dollar amount of crude oil.
Multiple factors have contributed to declining oil prices. As well as the dollar’s strong performance, soaring inflation rates and fears of a global economic downturn have dampened demand. Ongoing strict Covid curbs in China, the world’s largest energy consumer, has also pushed demand down. The impact of Russia’s invasion of Ukraine, which caused energy prices to skyrocket, has served to buffer oil prices against recession fears, though these fears now appear to be the key force driving the market.
By Robert Hart, Forbes Staff