Crude drops to fresh seven-month lows below $90/bbl mark

Front-month ICE Brent slumps by $4.17/bbl on the day, to $88.25/bbl at 09.00 GMT.

PHOTO: Crude tumbles below $90/bbl as recession fears have trigger demand concerns. Getty Images

Upward pressure:

Supply concerns related to the EU-Russia energy standoff has continued to provide some support to Brent. Russian president Vladimir Putin has threatened to "freeze" Europe with a total energy cut-off if Brussels goes ahead with a price cap on Russian exports.

A revived nuclear deal between Iran and the US is “off the table” and will not be signed in the foreseeable future, reports The Times of Israel's Hebrew counterpart Zman Yisrael. According to reports citing insider sources, Israel's Prime Minister Yair Lapid was informed about the Iran nuclear deal hitting a deadlock by US President Joe Biden and other administration officials. 

Downward pressure:

Renewed Covid-19 outbreaks in China and fresh lockdowns continue to threaten the country's oil demand recovery. To prevent further transmissions of Covid-19 in the 21.2 million people-strong Sichuan capital of Chengdu, authorities have extended the city's lockdown indefinitely in most districts.

The European Central Bank is on course to hike its key interest rate by 75 basis points in a policy meeting scheduled for later today, according to a Reuters economist poll. Conservative policymakers have made hawkish comments in the wake of soaring inflation and recession concerns.     

Morgan Stanley says September offers the best opportunity for the central bank to send a clear signal of determination, while Allianz Global sees “less risk in doing more than doing less” for the ECB, given the level of inflation and future uncertainties.

By Konica Bhatt

Please get in touch with comments or additional info to news@engine.online