The prices of crude oil in the global market had crashed with the Brent crude shedding $6.31 or 5.58 per cent to $106.86/barrel as at 8.03pm on Tuesday Nigerian time following demand concerns after the International Monetary Fund reduced its economic growth forecasts and warned of higher inflation.
The fall is despite lower output from the Organisation of Petroleum Exporting Countries and its allies (OPEC+). The jointly produced 1.45 million barrels per day below its targets in March, as Russian output began to decline following sanctions imposed by the West, according to a report from the producer alliance seen by Reuters.
Russia produced about 300,000 bpd below its target in March at 10.018 million bpd, based on secondary sources, the report seen by Reuters showed.
The IMF cut its forecast for global economic growth by nearly a full percentage point, citing Russia’s invasion of Ukraine, and warned that inflation was now a “clear and present danger” for many countries.
The bearish outlook added to price pressure from the dollar trading at a two-year high. A firmer greenback makes commodities priced in dollars more expensive for holders of other currencies, which can dampen demand.
Concerns over demand growth were already in focus after a preliminary Reuters poll on Monday showed United States crude oil inventories were likely to have risen last week.
The price decline on Tuesday followed a rise of more than one per cent on Monday, when oil prices hit their highest since March 28 on Libyan oil supply disruptions.
The country’s National Oil Corp warned on Monday of “a painful wave of closures” and declared force majeure on some output and exports as forces in the east expanded their blockade of the sector over a political standoff.
The possibility of a European Union bans on Russian oil over its invasion of Ukraine continued to keep the market on edge.
French Finance Minister Bruno Le Maire on Tuesday said that an embargo on Russian oil at a European Union level was in the works.