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Jeddah - Yasmine El Tohamy - RIYADH: Oil prices fell on Monday to their lowest in 15 months on concerns risks in the global banking sector may cause a recession that would lead fuel demand to decline and ahead of a potential hike in US interest rates this week.
Brent crude futures for May settlement fell $2.32, or 3.2 percent, to $70.65 a barrel at 10:10 Saudi time. The contract earlier declined to as low as $70.56, its lowest since December 2021.
Last week, Brent fell nearly 12 percent, its biggest weekly fall since December.
US West Texas Intermediate crude for April delivery was at $64.59 a barrel, down $2.15, or 3.2 percent. It earlier fell to $64.51, also its lowest since December 2021. The contract declined by 13 percent last week, its biggest weekly drop since last April.
Kuwait Oil Co. declares a state of emergency
Kuwait Oil Co. on Monday declared a state of emergency due to an oil leak in the west of the country.
Production was not affected because of the oil leak and there were no injuries reported, the company said in a statement.
Iraq, OPEC stress need to coordinate to stabilize prices
Iraq's Prime Minister Mohammed Shia al-Sudani and Haitham Al Ghai, Secretary General of the Organization of the Petroleum Exporting Countries stressed the need to coordinate among oil-exporting nations to ensure prices do not fluctuate and impact both exporter and consumer countries, the Iraqi government said in a statement.
Iraq is one of the founding members of OPEC.
Meanwhile, Iraqi oil minister Hayan Abdel-Ghani on Sunday said his country is committed to maintaining its 220,000 barrel per day oil output in line with OPEC+ rates.
Speaking during a conference in Baghdad, Abdel-Ghani also said Iraq is ready to increase production if required to do so by OPEC+.
"We obliged some oil companies operating in the south to cut production to come in line with OPEC+'s agreed rates," he added.
Goldman Sachs cuts Brent oil forecasts
Goldman Sachs cut its forecasts for Brent crude oil futures over the weekend after prices slumped 15 percent since early March on banking and recession fears.
The investment bank is now expecting Brent to average $94 a barrel in the next 12 months and $97 in the second half of 2024, down from $100 previously, it said in a note dated March 18.
“Oil prices have plunged despite the China demand boom given banking stress, recession fears, and an exodus of investor flows,” the bank’s analysts said.
“Historically, after such scarring events, positioning and prices recover only gradually, especially long-dated prices.”
The bank has also lowered demand projections for Europe and North America in 2023 while raising that for China.
This led to a 600,000 barrel per day cut for 2024 estimates while keeping the 2023 demand forecast unchanged.
Shipments stopped at TotalEnergies' refineries
Shipments of refined products from oil major TotalEnergies' French sites were blocked on Monday for the 13th day of strike action, while some refineries were operating at a reduced flow, a company spokesperson said.
The industrial action is part of the nationwide movement against pension system changes lifting the retirement age two years to 64 that was forced through parliament without a vote last week.
Production at the Normandy and Feyzin refineries was reduced on Monday as deliveries were blocked, with the Donges and La Mede refineries also seeing blocked shipments as the latter are offline for maintenance, the company said.
(With inputs from Reuters)
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