The process, which began with the bankruptcy of Silicon Valley Bank (SVB) and Signature Bank in the US, has deepened with developments in the American First Republic and Switzerland-based Credit Suisse.
While the monetary policy of the US Central Bank (Fed) is cited as one of the main reasons for the crisis in the banking sector, the Fed is expected to take more cautious steps after these developments, which also fuel global economic recession concerns.
While the volatility in the oil market increased with concerns that the bank bankruptcies that started in the US would trigger a global banking system crisis, oil prices decreased to the lowest levels in the last 15 months, focusing on the steps to be taken by the US and European central banks.
The price of a barrel of Brent oil, which is considered an international reference, decreased to $71.44 on Friday. WTI oil was traded at $65.27 a barrel. Thus, both types of oil recorded their lowest levels since December 2021.
"Decreases in oil prices are not due to supply and demand"
Randall Mohammed, Managing Director of PetroIndustrial Oil Storage Solutions Company, said the declines in oil prices were due to increases in U.S. oil inventories, concerns about the banking sector triggered by the SVB's bankruptcy and a possible interest rate hike by the Fed.
"The recent decreases in oil prices are financially funded, so they are not very relevant to the supply and demand for oil worldwide. Therefore, the impact of this banking crisis on oil prices will not be long-lasting."
Pointing out that the crisis in the US is limited to local banks and that the rapidly falling oil prices have recovered somewhat after the intervention of the government, Mohammed said, "The OPEC+ group's statement that there is no problem on the supply side, the increasing demand in China and the relatively weak course of the US dollar also contributed to this recovery. Oil prices are forecast to be at $75 to $80 per barrel," he said.
Kate Dourian, visiting professor at the Institute for Arab Gulf States in Washington, said of the downward pressure on oil prices, "If price decreases continue, the OPEC+ group will have to intervene. More interestingly, the G7 countries have a ceiling price of $60 per barrel for Russian oil exports. Prices are already in the $72 band, which will not touch Russia much at the $60 ceiling price."