• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 2 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 6 days If hydrogen is the answer, you're asking the wrong question
  • 12 hours How Far Have We Really Gotten With Alternative Energy
  • 10 days Biden's $2 trillion Plan for Insfrastructure and Jobs
Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Premium Content

Brent Back Below $80 As Banking Fears Persist

  • The collapse of Silicon Valley Bank sent oil prices crashing on Monday morning, although prices quickly rebounded on suggestions that the fears of a broader banking collapse were overblown.
  • On Tuesday morning, prices fell once again, with Brent falling back below $79 during a volatile start to the day.
  • Tuesday’s oil price drop may have been more severe if it wasn’t for OPEC boosting its oil demand growth forecast for China in its latest monthly report.
Oil prices

Brent crude oil prices sank back below the $80 threshold on Tuesday as the markets remained unsteady following the Silicon Valley Bank collapse.

The price of the Brent crude oil benchmark fell below to $79.00 on Tuesday morning in volatile trade—a more than 2% drop on the day. Oil prices began a hefty slide on Monday, losing $2 per barrel, as the market feared a wave of bank failures in light of the SVB shutdown as it helped to highlight possible economic sinkholes that were created by continued rate hikes.

The oil industry’s pricing fate would have been even more pronounced if it hadn’t been for positive Chinese demand data. OPEC revised up its forecast for Chinese demand growth to 710,000 bpd.

Washington had stepped in to calm the markets on Sunday, pledging that banks—not taxpayers—would bear the losses through the use of the money banks paid into the Deposit Insurance Fund.

WTI prices saw a steep decline on Tuesday as well, dropping below $73 per barrel at one point before recovering slightly.

WTI has seen a nearly $4 per barrel loss so far this week, while Brent crude has seen a loss of more than $3 per barrel to the lowest price point of the year.

The news of the bank collapse and subsequent fears that the condition could be contagious are seen by some as unfounded fears unrelated to the commodities markets.

“We see Monday’s developments around the regional U.S. banks as more noise than news for commodity markets, and it should not have any meaningful medium- to longer-term impact,” a UBS analyst told Reuters on Tuesday.

Goldman Sachs has predicted that the bank collapse will cause the Feds to change course and pause rate hikes during the meeting next week.

By Charles Kennedy for Oilprice.com

ADVERTISEMENT

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Mamdouh Salameh on March 14 2023 said:
    The collapse of the Silicon Valley Bank (SVB) is sending shock waves across the financial markets around the world. Fears of contagion from the SVB collapse immediately hit the global oil market and the financial markets. However, good economic data from China and projections of growing oil demand in 2023 from OPEC+ are countering the bad news of the SVB collapse. This is why this hiccup could be very short-lived.

    This raises a very serious question as to why the United States is always the underlying factor behind global financial and economic crises.

    From the 1929 great depression to the 2008 subprime financial crisis and the 2014 oil price collapse, the underlying factors have always been related to weaknesses in the US economy and its banking system. The latest Silicon Valley Bank (SVB) collapse is the latest but it won’t be the last.

    Isn’t it odd that from the minute the US dollar became the reserve currency of the world in the aftermath of WW2 and later the currency of the global oil trade, the world started to face one financial crisis after another, sanctions became rampant and US outstanding debts became unsustainable?

    This SVB collapse highlights the opposing impacts of the world’s two largest economies on the global economy. While China, the world largest economy based on purchasing power parity (PPP), has been the driving force of growth in the the global economy, the United States the second largest has been plunging it in one crisis after another

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News