Oil price falls to lowest level since 2021

The oil price has dropped significantly again. A barrel of US WTI oil now costs 67.67 dollars, after the peak in April of around 87 dollars per barrel. A barrel of Brent North Sea oil now costs about 71 dollars a barrel, down from more than 90 dollars in April.

The price drop, the lowest since December 2021, is good news for motorists because it further decreases fuel prices at the pump. However, oil demand is disappointing partly due to fears of a recession.

180,000 barrels per day extra

According to consumer collective UnitedConsumers, the recommended price for a liter of Euro95 is now 2.09 euros. In April, consumers were still paying around 2.28 euros per liter.

The recommended price for a liter of diesel is now 1.80 euros, down from around 1.99 euros in April. The major oil companies’ recommended prices are usually charged only along highways because prices are often lower elsewhere.

Oil prices have been falling for some time. Part of the reason is the Saudi-Arabia-dominated oil cartel OPEC+’s plan to gradually increase production again by 180,000 barrels a day in October and November, following production cuts in recent years. Those plans were shelved earlier this week, but the cartel still wants to increase production over time.

Disunity at OPEC?

OPEC+ countries produce a total of 39.7 million barrels of oil per day. However, oil demand is disappointing. For example, there are concerns about weaker oil demand in China, the world’s largest oil importer, due to disappointing figures for the Chinese industry. There is also uncertainty about US oil demand. The economic situation in the US, the world’s largest oil consumer, is deteriorating due to high interest rates.

At the same time, competition is also coming from the emergence of other oil-producing countries such as Brazil, Guyana, and the United States. In contrast, OPEC countries, such as Iraq and Kazakhstan, have failed to stick to their official quotas and thus produce more oil than agreed.