The combination of the lingering crisis between The United State of America and China and fear over a second wave of the COVID-19 pandemic has seen global oil prices drop late on Monday.
Brent crude declined by 1.62 percent to sell at $42.64 losing over 21 cents while America’s West Texas Intermediate (WTI) crude was down by 1.19 to $40.64 a barrel, from $41.40.
The drop in oil prices is said to be a reflection of the financial markets in Asia. The deteriorating relationship between the United States and China continues to take a toll on the global markets. Last week, the US government ordered China to close its consulate in Houston, accusing it of spying activities under the guise of diplomatic work, while China retaliated by taking over the United States consulate in Chengdu.
Furthermore, the resurgence of COVID-19 cases in the United States, Spain, Brazil and the reintroduction of lockdown measures in some states led to rising concerns about the speed of demand recovery in the world’s largest petroleum consuming economy. According to John Hopkins University, the number of COVID-19 cases in the United States exceeded 4 million, with 15.4 million cases confirmed globally.
This is coming on the heels of a recent recovery of oil prices after lockdown measures across most parts of the world were eased. This, in turn, has supported crude prices, a situation that has also encouraged the world’s top producers to increase exports.
However, the recovery has been slow because the re-introduction of lockdowns in some parts of the United States and other parts of the world which has been limiting oil consumption.