Oil prices have fallen below $95 a barrel for the first time since Russia invaded Ukraine, as fears of an impending global recession grip commodity markets and batter forecasts for demand.
Both major crude benchmarks shed more than $5 a barrel on Thursday, or more than 5 per cent, adding to a broad rout over the past six weeks.
Brent, the international benchmark, fell as low as $94.50 a barrel. It closed at $96.84 on February 23, the day before Russia invaded Ukraine. US marker West Texas Intermediate dropped to $90.56, below its close of $92.10 before the war.
Damien Courvalin, an analyst at Goldman Sachs, said the sharp shift lower reflected “growing concerns over oil fundamentals”, as worries over supply shortages are outpaced by concerns over the potential for a sharp drop in demand.
Russian president Vladimir Putin’s decision to send troops across the border caused prices to soar earlier this year, with both Brent and WTI briefly trading above $130 as western countries retaliated by imposing sanctions on Russia, one of the world’s biggest exporters.
But recessionary jitters and the prospect of the US Federal Reserve stifling growth with more aggressive rises in interest rates have since called a halt to the rally. Crude prices have dropped by around a fifth since mid-June.
Oil has not been the only commodity to run out of steam in recent weeks. Many of the commodity surges that helped drive high levels of inflation have also slumped. Copper and iron have both fallen by about a third since their spring peaks.
Elevated oil prices have piled pressure on the administration of US president Joe Biden, whose polling numbers have dropped as motorists contend with near-record prices at the pump.
Biden is set to visit to Riyadh on Friday for his first meeting with Saudi crown prince Mohammed bin Salman, where he will lean on the kingdom to pump more oil to pull prices lower.
The latest slide in prices came as data suggested high prices were beginning to deter US motorists from the roads. Figures released on Wednesday by the US Energy Information Administration suggested petrol demand had slipped to its lowest level for the current time of year since 1996.
“The weakness of US oil demand indicators does appear to have led to the weakness in prices,” said Paul Horsnell, an analyst at Standard Chartered, noting that figures had “worsened significantly” in recent weeks.