In the markets there are always values that are reputed to be safe. Products and trades that go hand in hand never usually have a negative impact on investors, but things seem to be changing. The fluctuations in the price of oil in recent years they are leaving it in a compromised situation. And what is worse, given the strong influence of this energy source in practically the entire world, its weakness is making the great weakness of the global economy.
In recent weeks, the price of a barrel of brent oil It has registered minimum values that have not been seen in a long time. At the beginning of May, the $72.33 at market close They left some figures that were last seen in December 2021, and that they had even dropped to a minimum of 71.70 during the day. Something is happening with oil that is affecting its value considerably and that, furthermore, is drawing a very dark horizon both for it and for the economies that depend on its price.
Why is Brent oil bumping into these prices?
The expectations that are deposited on oil have been revised as a result of the strong fluctuations of the last weeks. All the forecasts have gone from rising to falling, seeing the trajectory of prices, affected by a series of factors that mainly look at the United States, one of the most influential agents in their appreciation.
The First Republic banking crisis, later bailed out by JPMorganhas caused a strong global market turmoill that has been reflected in massive falls of numerous weight assets. He malaise in the US economy It has been accentuated with the recent initiative of the Federal Reserve to raise the rise in interest rates by 25 basis points, assuming a brutal impact for all pockets in the North American territory. The shock wave has been such that, even on the other side of the pond, it has caused a rise that has left general interest rates around 5.25%, the highest since 2007, in the midst of the global economic crisis.
The drop in demand from the largest consumer of crude oil around the world has also had a colossal impact. The manufacturing in china has decreased, which has meant an immobilization of barrels of oil that are not necessary. Something that has coincided, in turn, with an increase in gasoline inventory on US soil. With a forecast of 1.2 million barrels, reality has put 1.7 million barrels on the game board, which also affects the value of crude due to the unexpected excess.
This has unleashed a perfect storm that, so far this year, already points to a 15% drop in oil price and that, consequently, is leaving dent in all markets of the world. The improvement in the dynamics of production in China is something positive, but the danger of rising inflation and its direct relationship with the problems that banks are suffering in different parts of the world are leaving an ever deeper mark whose trail is in a oil that loses value and importance and that, above all, shows that little by little it is ceasing to be a reliable resource to become something satellite.
Is it time for change?
Territories such as Europe have been highly dependent on oil, especially Russian production, but the war conflict that began in 2022 It has only worsened the situation and caused the price to skyrocket, as well as the search for other alternatives. Fortunately, We live in the era of renewable energy and alternative energy sources. Solutions that, in addition to being much less harmful to the environment, are gaining enough importance to begin to take ground away from oil.
It’s something that It is being seen at a domestic and professional level. While small, medium and large companies begin to implement sustainable solutions and using renewable energy sources for your day to day, achieving greater savings in consumption and costs, as well as reducing emissions, investment in energy begins to move further and further away from fossil fuels and their expiration date.
The change will take time to happen, but it will come at some time or another. Fluctuations in oil are proof that the fuse is shortening and that we must begin to look at other resources such as solid values to strengthen the economy internationally, as well as the clear need to avoid a strong dependence on oil. Diversifying has always been key to economic healthand we are experiencing a phenomenon that shows it more clearly than ever.
