Crude tumbles on recession fears, expected US attempts to curb gasoline prices
SINGAPORE (ICIS)–Crude prices fell sharply on Wednesday plunging more than $6/bbl at one stage amid growing fears that the US is heading into a recession.
Oil investors were also jittery over expectations US President Joe Biden may call for a temporary halt to Federal taxes on gasoline in order to alleviate pressure on car users during the peak summer driving season.
Goldman Sachs now sees a 30% probability of the US entering recession within the next year.
Meanwhile, moves by the Biden administration come ahead of the 4th July holiday weekend when the American Automobile Association (AAA) expects a record number of travelers.
Oil company leaders are set to meet up with senior Biden administration figures on Thursday amid growing pressure from the White House for the oil industry to do more to combat high prices as oil companies enjoy record profits from the hike in crude prices this year.
Meanwhile, ExxonMobil’s CEO recently said tight oil markets may last anywhere between three to five years.
Crude prices have declined from highs reached earlier on 14 June when ICE Brent hit a high of $125.19/bbl and from a previous high of $139.13/bbl seen on 7 March after Russia’s invasion of Ukraine.
Nevertheless, crude prices remain elevated by supply worries following the implementation of Russia sanctions and the surge in demand for refined products, particularly gasoil, gasoline and jet-kerosene, as the global economy recovers following the lifting of COVID-19 restrictions.
However, a sharp recovery in consumer demand and disruptions to supply chains have elevated inflationary pressure. Supply chain problems have been heightened by an uneven easing of COVID-19 restrictions, particularly following recent lockdowns in China.
The US Federal Reserve Chairman Jerome Powell is set to appear before the US Congress later on Wednesday where he will discuss moves to combat inflation which has risen to its highest level in 40 years hitting 8.6% in May.
Front page picture: A pumpjack in Oklahoma,
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