Brent crude oil prices remain under pressure on tensions that risks in global banking sector may spark a recession worldwide

• On March 20, Brent touched $70 per barrel, losing nearly $16 per barrel in a fortnight.
• Today, Brent crude prices were trading at $74 per barrel.
• The current trend of fall in crude oil prices has reversed. After shooting up last June to $124 a barrel on growing tensions between Russia and Ukraine, prices have started cooling.
• Also, analysts say that markets are worried that the risk in the global banking sector could lead to a recession and impact fuel demand.

Brent crude oil prices have fallen to their 15-month low below $75 per barrel and dropped more than 10% in the last one week amid uncertainty in the global banking crisis that is feared to dent fuel demand. On March 20, it touched $70 per barrel, losing nearly $16 per barrel in a fortnight.

Today as of 2:44 pm, Brent crude prices were at $74 per barrel.

The current trend of fall in crude oil prices has reversed the trend of oil prices that was in a rising spree last year as during June it had touched $124 a barrel on growing tensions between Russia and Ukraine.

“The price of Brent crude has fallen below $75/bbl on oil demand concerns after the recent failure of a large US bank has raised fears of a contagion affect and a financial crisis in the US,” said a report by JM Financial.

Also, analysts say that markets are worried that the risk in the global banking sector could lead to a recession and impact fuel demand.

“MCX Crude oil prices remained volatile and edged up on Monday after diving to their lowest levels in 15 months as the market worried that risks in the global banking sector could spark a recession that would dent fuel demand,” said analysts at ICICIdirect.

On the positive side, low crude oil prices typically benefit the stock market and currency. This is because low oil prices indicate less expense for the country that is dependent on oil imports. The country imports 80% of its oil needs and any rise in oil prices increases the import bill.

“Lower crude prices are expected to support domestic currency and equities,” said analysts at ICICIdirect.

As a result, after days of heavy sell off and fall in crude oil prices Sensex was up 0.83% at 58,115 as of 2:46 pm.

Meanwhile, Prathamesh Mallya, assistant vice president - research, non-agri commodities, and currencies at Angel One expects crude prices to remain under pressure citing uncertainty around the banking crisis and the growing crude stockpiles, which would keep upside limited.

Goldman Sachs on March 18 revised its oil price forecast for the rest of the year. The investment bank expects Brent crude to reach $94 a barrel in the 12 months and $97 a barrel in the second half of 2024. Analysts had expected the commodity to reach $100 a barrel in the second half of 2023 earlier.

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