Brent oil prices slip

Brent crude oil fell below $72 a barrel in domestic trade amid volatility in the banking sector.

The Brent contract for May delivery was trading at $71.65 a barrel, down $1.33 from Friday’s close. WTI Nymex was 65.52 dollars per barrel in April, 1.23 less than the previous settlement.

Oil prices have come under pressure due to volatility in the Western banking sector following the collapse of tech startup-focused Silicon Valley Bank and Swiss rival UBS’s takeover of Credit Suisse.

The decline was likely short and not driven by supply-demand fundamentals related to physical commodities.

Over the past year, OPEC+ has advocated for stability in regulating oil prices to encourage long-term investment in reserve positioning and avoid supply shortages.

In a note dated March 15, analysts at UBS indicated that widespread financial market turbulence is unlikely to affect crude oil production figures. However, during heightened volatility, investors tend to pull out of risky assets such as oil and invest in safe havens.

Citing bank stress, recession fears, and investor outflows, analysts at Goldman Sachs cut their oil price outlook on March 18 and now expect Brent to reach $95 a barrel.

Experts have questioned whether reopening China, the world’s biggest importer of crude oil, could boost demand given that COVID-19 restrictions disrupted purchases for much of the past year.

The outlook of the oil supply is blurred by the Russian limitations stemming from the Western sanctions imposed on their offshore oil and petroleum products in December and February.