The Global Oil Prices have dropped by $4 barrel on Monday, with Brent Crude falling below $100 for the first time since 16 March on the announcement of the release of record volumes of crude and oil products from reserves and the ongoing coronavirus lockdown in China.
According to the Bank of America, the Brent Crude is expected to average around $102 a barrel for 2022-2023, but it cut is summer spike price to $120, while Swiss Investment Bank UBS also lowered its June Brent forecast by $10 to $115 a barrel.
The release of strategic government oil reserves should ease some market tightness over the coming months, reducing the need for oil prices to rise to trigger near-term demand destruction,” said UBS analyst Giovanni Staunovo.
It is pertinent to mention that price of Brent Crude for June delivery was down $4.29, or 4.2%, at $98.49 a barrel by 1341 GMT, while U.S. West Texas Intermediate crude lost $4.33, or 4.4%, to $93.93.
According to the details, the International Emergency Agency (IEA) member nations will release 60 million barrels over the next six months, with the United States matching that as part of its 180 million barrel release announced in March. This move will counter the deficit of Russian Crude after Moscow as hit by sanctions over its invasion of Ukraine.
JP Morgan analysts state that release of Strategic Petroleum Reserve (SPR) volumes equals 1.3 million barrels per day (bpd) over the next six months and is enough to offset a shortfall of 1 million bpd of Russian oil supply.
The move will help overcome the shortfall and compensate the deficit of Russian Crude. Furthermore, the new COVID-19 wave in China’s Shanghai has triggered a lockdown of 26 million people under its “zero tolerance” policy for the coronavirus.
Thus, the Global Oil Prices have dropped below the $100 mark for the first time since 16 March 2022.