Brent Crude oil prices are falling continuously. The oil demand has been decreasing regularly since the start of the year. If we talk about Brent oil, it reached $69.08 per barrel. while the crude oil reaches $65.82 per barrel. These are the lowest of its time in a year. Brent oil is currently at its lowest since December 2021. While US Crude oil is at its lowest since May 2023. What are the reasons behind the major fall in Brent Crude oil prices? Let us discuss below.
Why Are Brent Crude Oil Prices At Its Lowest?
Brent Crude Oil Prices are facing a major fall in demand. Since demand is directly proportional to the prices, the fall of demand also results in the fall of prices. Till now, Brent fell below $70 and US Crude fell below $66. The OPEC (Organisation of Petroleum Exporting Countries) is also projecting a demand downfall. According to them, the demand for Brent crude oils will increase. However, it will not match the earlier projection. Thus, it will remain lower than the earlier projection by 80,000 bpd. The upcoming year (2025) also expects to have an increase in demand by 1.7 million bpd. It is also lower by 40,000 bpd than the actual estimates. As discussed above, the prices are already the lowest for Brent after 2 December 2021. While it is the lowest for US crude after May 2023.
After a Tropical storm on Monday, there is a chance of some recovery. The threats over oil and production and refining may increase the demand for some duration. Thus, it may lead to a short-term recovery. However, nothing is sure for the long-term cases. Apart from that, many countries are now focusing on sustainable development. Thus, the focus on non-fossil fuel resources is increasing over time. It will further increase in the coming years and can be another big reason for the falling crude oil demand and prices. World’s Fifth Largest Economy, India is also moving towards electric vehicles or battery-oriented vehicles promoting a greener environment. Apart from that, solar energy demands are also increasing in the case of electricity generation.
Thus, solar and electric energies are going to replace the major role of fossil fuels in the bigger economies. It will have an impact on the Brent crude oil demand. Thus, Brent crude oil prices do not have a higher chance of reaching their earlier levels in the future. Stay tuned for more information on our website.