Global oil prices eased by a significant amount yesterday as a barrel of crude oil dropped below the $107 mark. The development would be welcome news to consumers and businesses who have faced high energy costs in recent weeks.
A barrel of Brent crude was trading at $106.84 in the afternoon on the London Stock Exchange-$4.44 lower than a day earlier, and on the US market prices shed $3.70 for a barrel price of $100.45; psychologically significant as the commodity heads back to three-figure pricing.
The fall was caused by a number of factors, and a calming of diplomatic signals from Washington over the recent conflicts in the Middle East provided traders with some ease. The announcement that a supertanker successfully passed through the Strait of Hormuz also added to hopes, as the route is crucial to the global oil supply.
Although this is a welcome decrease according to traders, the current global oil market is highly susceptible to fluctuation. High prices, which had pushed Brent crude close to $110 per barrel, were also due to recent tensions in the Middle East, as the Strait of Hormuz shipping lanes were disrupted.
This decrease will no doubt have a global effect on all business sectors, from transport, which has to bear high fuel costs, to consumers at the petrol pump. This decrease if it is sustained, will provide some relief from soaring prices for both consumers and companies worldwide.
The calm still remains fragile however, with markets waiting anxiously to see how the situation develops within the Strait of Hormuz and the whole region.
