- Oil prices fell to their lowest level since Russia invaded Ukraine on February 24.
- Recession fears weigh on oil demand, causing futures prices to fall 10% themselves this week.
- US gas prices have fallen for 49 straight days.
Oil prices fell to their lowest since Russia invaded Ukraine as recession fears caused futures to fall 10% in a week.
Benchmark US West Texas Intermediate fell 2.1% on Thursday to $88.54 a barrel — down nearly 10% so far this week. They were trading at $88.98 a barrel as of 12:10 p.m. EDT.
International benchmark Brent crude futures fell 2.75% to $94.12 a barrel on Thursday — down 14% so far this week. They were trading at $94.42 a barrel as of 12:09 p.m. EDT.
Both grades rose to over $120 a barrel earlier this year after Russia invaded Ukraine.
The drop in oil prices comes as a relief to consumers already grappling with rising inflation as average gas prices in the US fell for 49 straight days on Thursday. President Joe Biden said in a tweet As of Wednesday, more than half of the country’s gas stations sell gasoline for less than $4 a gallon.
Energy prices were already rising before the Ukraine war, and demand recovered as the pandemic eased. Fears of supply disruptions after the start of the war caused the price to rise as Russia is a major oil exporter.
As energy inflation rose, the Federal Reserve began raising interest rates, making it more expensive to borrow for everything from mortgages to credit cards and encouraging people to save rather than spend – which in theory helps to lower prices.
But the effects will take time to be felt, and there is a risk that the central bank will hike rates enough to slow the economy and even plunge it into recession if demand shrinks.
“The growing concerns about the slowdown clearly showed that commodities are being attracted by the demand side despite poor supply,” wrote Vishnu Varthan, head of economics and strategy at Mizuho Bank, in a note on Friday. “It appears that crude oil has taken a bit of a hit on this as prices have stalled significantly.”