International Oil Prices Plunge Again... Brent Crude Falls Below $16 per Barrel (Comprehensive)

[Asia Economy Reporter Naju-seok] The international oil price of Brent crude has fallen below $16 per barrel.

On the 22nd, at the London ICE Futures Exchange in the UK, the June delivery Brent crude price briefly dropped below $16 per barrel during trading. This price level is the lowest since June 1999. As of 2 PM Korean time, Brent crude is trading at $16.25 per barrel, down 15.93% ($3.08) from the previous trading day.

[Image source=Yonhap News]

At the same time, the US West Texas Intermediate (WTI) crude also fell 8.7% ($1.01) to trade at $10.56 per barrel.

Oil prices have been volatile since May 20, when the May delivery WTI crude fell into negative territory for the first time in history. At that time, the May delivery WTI dropped to as low as -$40.32 per barrel and closed at -$37.63.

Due to the impact of the novel coronavirus disease (COVID-19), oil demand has sharply decreased, resulting in an oversupply situation in the oil market. Because of this, oil storage facilities are filling up, and soon there will be nowhere suitable to store additional oil.

Oil-producing countries have also started production cuts, but the timing was late, and concerns remain that it may be insufficient. Previously, OPEC+ (the Organization of the Petroleum Exporting Countries (OPEC) member countries and non-OPEC allies) agreed to reduce daily oil production by 9.7 million barrels starting from the 1st of next month. The market expects the actual effects of the production cuts to appear only after mid-next month. Moreover, considering that the decrease in oil demand amounts to 30 million barrels compared to the same period last year, there are forecasts that the scale of production cuts is too small to resolve the oversupply situation.

Vandana Hari, founder of oil market analysis firm Vanda Insights, warned, "No one knows where the bottom is anymore," adding, "If it is confirmed that US oil inventories have increased again, oil prices could fall further."

Meanwhile, Bloomberg News explained that regarding the plunge in Brent crude prices, Russian and Nigerian crude oils are trading below $10 per barrel.

This content was produced with the assistance of AI translation services.