Oil prices drop to lowest in seven months

Oil prices have plummeted on Wednesday, with the global benchmark Brent crude dropping below $90 per barrel, while US benchmark WTI is down to around $85 a barrel.

The cost of November futures for Brent crude oil have fallen by more than 4% to trade at $89.07 per barrel as of 13:35 GMT, according to data from London’s Intercontinental Exchange. Brent has slid below $90 per barrel for the first time since February 8.

October futures on WTI crude are down 2.7% to trade at $84.58 per barrel, the first time it has dipped below $85 per barrel since January 25.

Many analysts believe the drop in oil prices stems from a variety of factors, including the strengthening of the dollar and fears of a US recession, as well as lingering Covid-19 restrictions in China.

Overall, trading has been choppy on Wednesday, with prices initially rising after Russian President Vladimir Putin announced that the country would not supply energy to nations that impose price restrictions.

However, prices later headed down again.

Last Friday, the finance ministers of the G7 countries agreed to establish a price cap on Russian oil. The group, consisting of the US, UK, Canada, Germany, France, Italy and Japan, has proposed to prohibit insurance and financing of tankers carrying Russian oil at a price higher than the cap. However, some experts have warned that rather than lowering the price of oil, a cap is likely to send global prices higher.

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