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Why led oil prices declined 5% within a week?

oil prices

London, (Business News Report)|| Oil prices have ended the week with a loss of 5% of their value, in light of the repercussions that affected prices. The Russian-Ukrainian war was the main reason for the decline in oil.

Despite the decline, oil prices are still hovering around $100 a barrel, at a time when supplies, the Coronavirus pandemic and war are still casting heavy shadows.

Expectations also came from weak global economic growth, raising interest rates, and anti-Coronavirus restrictions in China, which negatively affected demand, although the European Union is considering banning Russian oil imports.

Brent crude fell $1.68, or 1.6%, upon settlement to $106.65 a barrel, and US West Texas Intermediate crude fell $1.72, or 1.7%, to $102.07 a barrel upon settlement.

The International Monetary Fund this week lowered its forecast for global economic growth, while Federal Reserve Chairman Jerome Powell said Thursday that a half-point increase in the interest rate would be an option at the bank’s next meeting in May.

“At this stage, fears over China’s growth and overtightening by the Fed, capping U.S. growth, seem to be balancing out concerns that Europe will soon widen sanctions on Russian energy imports,” said Jeffrey Halley, analyst at brokerage OANDA.

Expectations on demand from China, the world’s largest oil importer, continued to pressure the market.

Shanghai announced new measures to combat the Coronavirus, including a daily examination, as of Friday, to curb the latest outbreak of the disease in the country.

Brent price reached $139 a barrel last month, the highest level since 2008, but the two benchmarks recorded weekly losses of about 5% each.

Baker Hughes Energy Services said in a report Friday that the number of oil rigs, an early indicator of future production, increased by one to 549 over the week ending April 22, the highest level since April 2020.

The current support for prices comes from a lack of supplies after production was disrupted in Libya and its decline by 550,000 barrels per day, and supplies could decrease further if the European Union imposed an embargo on Russian oil.

The Netherlands said Friday it plans to stop using Russian fossil fuels by the end of the year.

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