The global benchmark for oil prices, Brent crude dipped to under $78 a barrel, from its previous high of $79.72 on Tuesday. Amidst anticipation of tropical storm Gordon expecting to make landfall with the force of a hurricane, oil companies had temporarily suspended operations in offshore platforms. However, by Wednesday the storm had weakened, with lesser threat to oil producers.
Brent crude which had surged to its highest prices at $79.72 which was the highest over the last three months slipped to below $78, while US oil prices fell to $68.99, a difference of 88 cents. Analysts were quick to point out that Gordon turned out to be a damp squib, a storm in a teacup, as the anticipated hurricane failed to drive prices higher.
The OPEC (Organisation of Petroleum Exporting Countries) prefer to have Brent crude trading at the present range of between $70 to $80, which has been the price range in the last four months. The prices could receive a fillip if the usual reports on stocks reflect lower inventories. Industry analysts are of the opinion that stocks may have fallen by around 1.9 million barrels last week, and the reports are awaited. Government reports announced officially are due to be released on Thursday.
The prices are expect to go north as the impact of US sanctions on Iran impacting the supply of 1.5 million barrels every single day. The sanctions from November have resulted in lower exports, and have negated the pact within OPEC member nations to boost the production. Stephen Innes, of the Canada, based OANDA, said that with the third largest exporter slashing production, the impact of 1.5 million barrels will have a strong influence on prices in the coming weeks.
There is a concern on the market that oil is falling due to market conditions that are spreading and restricting economic growth. There are also fears that Turkey’s currency crisis will spread to other markets regarded as emerging markets. OPEC Secretary General Mohammad Barkindo stated that sanctions and trade wars are likely to further impact energy demand.