Oil prices have fallen back to levels last seen before Russia’s invasion of Ukraine in a blow to Vladimir Putin and Saudi Arabia, as heavyweight producers scramble to support prices.
Brent crude – the UK’s benchmark oil price – fell to its lowest level in almost seven months on fears of a slump in global demand, extending a recent slide that will easing the pressure on drivers.
The latest drop came despite pledges in recent days from major oil-producing countries, including Russia increase production in an attempt to support prices.
Brent crude fell as much as 1.8 percent to $91.20 a barrel, levels last seen in the days leading up to Russia’s invasion of Ukraine and subsequent energy shock.
Oil has fallen by more than a quarter since June, reducing the revenue the Kremlin can make to fund its war from higher energy prices.
After surging to nearly $140 a barrel at the start of the war, crude oil has come under pressure as recession worries erode global demand.
The the cost of living crisis is pushing Europe into recession while China’s Position on Zero Covid also impacting demand from the world’s second-largest economy.
The latest drop came despite producers’ efforts to support prices, which are still historically high.
The OPEC oil cartel and allies including Russia announced on Monday that they plan to increase crude oil production by 100,000 barrels per day in a sign that they plan to keep prices high.
Mark Hefele, chief investment officer at UBS Global Wealth Management, said the additional drilling was “relatively trivial compared to the nearly 100 million barrels of global daily production.” But he warned that prices would recover as it “sent a message that the oil exporting group is ready to defend the price of oil”.
He said: “Demand for oil will be boosted globally by its increasing use to generate electricity, reflecting the rising price or reduced availability of gas and coal.”
Worries about the global economy were fueled by disappointing trade data from China overnight.
China’s exports rose 7.1 percent year-on-year in August, a sharp slowdown from 18 percent growth the previous month. Import growth slowed from 2.3% to just 0.3%
Mark Williams, chief Asia economist at Capital Economics, said: “There was a particularly sharp decline in exports to the US and in supplies of consumer durables, which grew the most during the pandemic.
“We expect exports to soften further and imports, which have fallen significantly in real terms over the past 18 months, to remain weak.”