Oil prices dipped roughly 5 percent on Tuesday’s volatile trading activity after the International Monetary Fund slashed its economic growth forecast and expressed concern over continued high inflation.
As such, the global benchmark Brent crude took a dive of $5.91, to settle at a price of $107.25 per barrel. In addition, US West Texas Intermediate slipped $5.65, to $102.56 per barrel. These are both declines of about 5.22 percent.
These prices fell even as OPEC+ producers lowered output to 1.45 million barrels per day, which is notably lower than its March targets. This parallels a decrease in Russian output, which began to slow down after sanctions imposed by Western nations (the US) over the country’s invasion of Ukraine. Specifically, Russian production fell by roughly 300,000 barrels per day to miss its March target of 10.018 million bpd.
Last month, OPEC+, which includes OPEC members as well as select Russia-led allies, reached an agreement, in March, to aim for an oil output boost by as much as 432,000 bpd by next month. The hope for this, of course, is to address consumer pressures to bring down quickly-escalating gas prices.
Overall, the IMF contracted its global economic growth forecast by almost one full percentage point. Obviously, the Russian invasion of Ukraine is a major contributor of this. Inflation—whether authentic or not—is now also a clearly apparent obstacle to recover for many countries. Prices are going up everywhere and on everything from cost of living to food to energy and other goods. A continued uptick in these daily costs could trigger major social unrest across the globe, but particularly in the more vulnerable, less-developed countries.
This marks the second forecast downgrade from the IMF for this year. Looking forward, the International Monetary Fund claims to now project we can see global growth of 3.6 percent for both the end of this year and even into 2023. That is a drop of 0.8 percent and 0.2 percent for each year, respectively.