Around 4:30 p.m., the price of New York crude plunged to 78.88 dollars with a drop of 5.52% and Brent fell 4.81% to 86.11 dollars.
Crude oil prices slumped on Friday, with New York-listed WTI dipping below $80 a barrel for the first time since January, weighed down by the dollar steamroller and global recession fears.
Around 2:30 p.m. GMT (4:30 p.m. CET), a barrel of American West Texas Intermediate (WTI), for delivery in November, plunged 5.52% to 78.88 dollars.
A barrel of Brent from the North Sea for delivery the same month fell 4.81% to 86.11 dollars.
After soaring to $130.50 for WTI and $139.13 for Brent at the start of the Russian invasion of Ukraine due to supply limits from Russia, crude fell sharply.
With fears of a global recession and therefore lower demand for oil returning to the forefront, the rise in WTI since the start of 2022 is now only around 5%.
“The widespread monetary tightening of the past two days is fueling fears of a blow to growth,” said Craig Erlam, analyst at Oanda.
On Wednesday, the US Federal Reserve (Fed) notably tightened the screw by 0.75 percentage points in order to curb inflation. It thus opened the ball for a week of rate hikes by many central banks around the world.
If fears about the health of the global economy amplify, accentuating the downward trend in crude oil by curbing demand, “Brent could return to the zone (of) 80 dollars a barrel in the short term”, estimates Han Tan, analyst at Exinity.
The Bank of England (BoE) also considers that the United Kingdom entered recession in the third quarter. A “recession” could even occur next year in the euro zone in the event of a “total cut off of Russian gas”, warned for its part the European Central Bank (ECB).
Geopolitical tensions
At the same time, the dollar continues to reach new heights against other currencies, benefiting from a US economy that is holding up more than expected and from its status as a safe haven in times of geopolitical tension.
However, sharp rises in the dollar make oil more expensive for buyers who use other currencies, which can weigh on demand.
This is particularly the case “of the Asian energy-importing giants” such as China and India, whose currencies “have been among the worst performers against the dollar”, explains Stephen Brennock, from PVM Energy.
The strength of the greenback is here to stay, adds the analyst, given the escalation of geopolitical risks regarding Ukraine.
Russian annexation referendums began on Friday in areas of Ukraine wholly or partly controlled by Moscow, marking a new stage in the conflict.
The former Russian president and number two of the country’s Security Council, Dmitry Medvedev, recalled Thursday on Telegram that his country was ready for a nuclear strike.
But analysts point out that the war in Ukraine still threatens the security of energy supplies.
“With an unlikely Iranian nuclear deal, the end of the releases of strategic oil reserves (US, editor’s note) and the imminent reduction of Russian imports by the EU, everything is in place” for a massive supply shock , and therefore a spike in oil prices, concludes Mr. Brennock.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) also remain “fully prepared to further restrict supply” if the fall in crude prices continues, underlines Craig Erlam. A scenario that the alliance had put forward at its last meeting, not excluding an emergency meeting.