Jakarta, CNBC Indonesia – The price of crude continues to fall. The spike in Covid-19 cases in China and Europe’s decision to cap the price of Russian crude sent world oil prices plummeting.
Brent oil prices were recorded at $83.63 a barrel during trading on Friday (11/26/2022), down 2%. Meanwhile, type in the oil light dessert o West Texas Intermediate (WTI) fell 2.1% to $76.28 a barrel.
In one week Brent crude fell 4.6% while WTI fell 4.7%. With yesterday’s decline, the price of crude oil has fallen over the past three weeks.
Brent and WTI oil prices both fell 5.6% in the past month.
The continued slump in world crude oil prices was triggered by fears of a further slowdown in the Chinese economy and restrictions on Russian crude prices.
Covid-19 cases in China continue to set new records. On Friday (11/25/2022), China reported another 35,183 daily cases. This means that China has recorded another record of daily cases for three consecutive days. The number of cases on Friday was also much higher than the previous day (32,943).
This spike in cases is obviously a new concern given China’s strict Covid-19 policy. With the addition of cases continuing to set records, political restrictions may be tightened so as to slow down economic activity.
China is the world’s largest importer of crude oil, so the slowdown in economic activity in that country will reduce demand for energy sources, including oil.
Oil prices also plummeted after that Countries of the Group of Seven (G7). reportedly agreed to cap the price of Russian crude. The price cap proposed by the G7 group of rich countries is US$65-70 (about IDR1 million) per barrel for Russian oil.
The goal of the price cap is to deprive Russian President Vladimir Putin of the revenue to finance a military offensive against Ukraine, without causing major disruptions to global oil markets that would drive up energy prices.
The G7 countries, including the United States, as well as the rest of the European Union and Australia, plan to impose price caps on Russian oil exports by sea on December 5.
“Russia’s price peak has been another catalyst that has served to keep prices lower in recent moments,” said Bart Melek, global head of commodity markets strategy at TD Securities. Reuters.
Oil prices are also under pressure after thatEnergy information administration(EIA) said Wednesday that US gasoline and distillate inventories rose sharply last week.
U.S. gasoline stockpiles increased by 3.1 million barrels, according to the Energy Information Administration (EIA),well beyond the ascent 383,000 barrelwhat analysts expect.
EIA data also showed a crude inventory draw of 3.7 million barrels, compared to analyst expectations in the survey Reuters for a decrease of 1.1 million barrels.
The continued decline in crude oil prices is obviously good news for Indonesia, which is a net importer of oil. With prices increasingly sloping, the oil and gas balance of trade deficit will decrease. With prices continuing to fall, the price of some types of fuel, especially unsubsidised fuels, can also be cheaper.
CNBC INDONESIA RESEARCH TEAM
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