The price of Oman crude declined a further $4.58 per barrel on Monday to settle at $70.35 per barrel (for delivery in May 2023) in trading on the Dubai Mercantile Exchange (DME).
Over the past seven days, Oman crude lost more than 15.80 per cent of its value, tracking losses suffered by international crude benchmarks on concerns that a crisis confidence in the banking sector could trigger a recession and cut demand.
On March 13, the marker price of Oman Crude Futures Contract (OQD) was $82.46 per barrel in trading on the DME platform. The price of the Omani benchmark has fallen by around $12.11 per barrel since then.
Meanwhile, Reuters reported that international oil prices dropped on Monday to their lowest level in 15 months amid worries that dangers to the global banking industry may trigger a recession that would reduce demand for gasoline and ahead of a probable increase in US interest rates this week.
Brent crude futures for May settlement fell $2.32, or 3.2%, to $70.65 a barrel at 0710 GMT. The contract earlier declined to as low as $70.56, its lowest since December 2021.
Last week, Brent fell nearly 12%, 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%. It earlier fell to $64.51, also its lowest since December 2021. The contract declined by 13% last week, its biggest weekly drop since last April.
The April contract will expire on Tuesday and the more actively traded May futures was also down 3.2% at $64.81 a barrel.
The slide in oil comes despite a historic deal which will see UBS, Switzerland's largest bank, buying the country's No. 2 lender Credit Suisse in an effort to stop a banking crisis from spreading.
Following the announcement, the US Federal Reserve, European Central Bank and other major central banks pledged to enhance market liquidity and support other banks.
"The market focus is on current banking sector volatility and the potential for further rate hikes by the Fed," said Baden Moore, National Australia Bank's head of commodity research.
"The upcoming Opec meeting is another potential catalyst on the outlook for the market. Further downside risk to prices increases the probability Opec reduces production further to support prices," Moore added, referring to the Organisation of the Petroleum Exporting Countries.
The US Federal Reserve is expected to raise interest rates by 25 basis points on March 22 despite the recent banking sector turmoil.
Separately, Goldman Sachs cut its forecasts for Brent crude after prices plunged 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.
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