The price of a barrel of Brent crude oil, a reference for Europe, was below the threshold of 71 dollars this Monday for the first time in almost two years due to the uncertainty that has been generated by the tensions in the financial markets and the evolution of Russia’s invasion of Ukraine. In this way, after the opening of the Old Continent stock markets, the price of a barrel was at 70.13 dollars, its lowest level since December 2021, with a decline of almost 4% compared to the previous closing.
For its part, so far this year, the benchmark crude oil for Europe has accumulated a drop of more than 18% and of close to 40% in the last twelve months. Regarding West Texas Intermediate crude, a reference for the United States, the price of a barrel also marked minimums since December 2021, falling to 64.12 dollars from 66.74 at the previous closing.
Both falls occur under a scenario in which the banking sector continues in free fall. The bailout of UBS by Credit Suisse Group has not served to calm the nervousness of investors, who continue to flee the sector. The six banks of the Ibex 35 continue last week with falls. Banco Sabadell and Unicaja Banco halted the initial falls at the opening and suffered declines of more than 4%, followed by Santander (-3.5%), Bankinter (-2.8%). BBVA also accentuated its hit (-2.7 %), while CaixaBank fell by more than 2.5%.
In the oil equation, the demand side has been one of the main drivers of rising prices since last December, as investors adjusted their expectations for global oil demand. This has been fueled by the reversal of China’s zero-Covid policy, a faster-than-expected recovery in activity, renewed international travel, and a recession that, so far, has not occurred in Western countries. . “This could mean an increase in demand of 1 million barrels per day (mb/d) in 2023, which would be equivalent to an increase in prices of 16,000 million dollars,” they analyze from Muzinich.
The final most important component for setting oil prices is OPEC+, which controls approximately 50% of world supply and could define its objective as maintaining stable inventory levels. The last measure taken by OPEC+ in October 2022 was to cut supply by 2 million barrels per day.
