Oil drops on global sell-off

Oil benchmarks slumped yesterday: ICE Brent front month lost -5.7% and ended the day at $105.94/b and NYMEX WTI front month closed -6.1% lower at $103.09/b.

European diplomats scrapped the idea to ban European companies to ship Russian oil, as partners (in particular Greece, Malta and Cyprus) were opposed to the measure. This is one adjustment as the deal is moving closer to obtain a green light from all twenty-seven member states.

A stronger dollar continued to push oil prices down, and the sharp decline is part of a global sell-off on riskier asset classes. Indeed, the Covid-19 outbreak in China does not slow, with new mobility restrictions imposed in Shanghai on Monday: the effect of the lockdowns negatively impact growth prospects.

Saudi Aramco reduced the prices of its crudes for June: the Arab Light grade, for example, went from $9.35/b above the Oman-Dubai average to $4.40/b. This move comes as May 2022 had the highest pricing differential recorded (according to S&P Global Commodity Insights) and while demand is shaky in China.

This morning oil benchmarks extend losses, with Brent quoting -1% lower.