Brent crude oil prices dropped below $70 per barrel on Tuesday, marking the first time the global oil benchmark has fallen to such levels since December 2021.
During trading hours, Brent crude plunged by 3.45 percent, settling at $69.36 per barrel, while West Texas Intermediate (WTI) also saw a significant decline, falling 3.86 percent to $66.06 per barrel.
According to a Bloomberg report, the drop in oil prices is largely attributed to adverse economic statistics from the United States and China, the world’s top two oil consumers. Dismal import numbers from both countries, released on Tuesday, have sparked concerns over diminishing oil demand, further increasing the likelihood of a surplus in the coming year.
Adding to this fear is the increase in output from non-OPEC (Organisation of Petroleum Exporting Countries) oil-producing nations, which has compounded worries of oversupply in the market.
This price decline comes just five days after OPEC and its allies (OPEC+), in a bid to stabilize global oil prices, postponed their plans to increase production by 180,000 barrels per day (bpd).
In a statement, OPEC explained that several key member nations, including Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman, have agreed to extend their voluntary cuts of 2.2 million bpd until November.
Following that, the cartel stated, the cuts would be gradually phased out on a monthly basis starting December 1, “with the flexibility to pause or reverse the adjustments as necessary.”
Furthermore, OPEC emphasized that countries that had exceeded their production quotas would “reconfirm their commitment that the entire overproduced volume will be fully compensated for by September 2025.”
As the global oil market grapples with both economic uncertainty and production challenges, all eyes remain on the response of OPEC+ and other stakeholders to ensure market stability in the months ahead.