Oil prices hit a three-month low on Wednesday as fears over Credit Suisse’s financial troubles caused unease in world markets, offsetting any hopes of a Chinese oil demand recovery. Brent crude dropped $1.21, or 1.6%, to $76.24 a barrel by 1135 GMT, while U.S. West Texas Intermediate crude futures (WTI) were down $1.20, or 1.7%, at $70.13.
Credit Suisse, Switzerland’s second-largest bank, has been hit by the collapse of Archegos Capital, a U.S. investment fund, which caused a loss of $4.7 billion. The bank’s largest investor, the Qatar Investment Authority, said it could not provide the bank with further financial assistance, which sent Credit Suisse’s shares and broader European stocks sliding.
The news of Credit Suisse’s troubles has led to concerns of contagion, with experts warning that other banks and financial institutions could also be affected. As a result, the dollar has strengthened, and equities have weakened, leading to lower oil prices.
“Fears of contagion are clearly gaining traction,” said Tamas Varga of oil broker PVM. “As a result, the dollar is stronger and equities are weakening – bad omens for oil.”
The oil market had been hoping for a recovery in Chinese oil demand, with the country’s economy showing signs of bouncing back from the pandemic. However, Credit Suisse’s troubles have overshadowed any positive news from China, leading to lower oil prices.
The situation with Credit Suisse is not unique, with other banks and financial institutions also facing financial difficulties. The pandemic has hit the financial industry hard, with many companies struggling to survive.
The oil market is likely to remain volatile in the coming weeks as the situation with Credit Suisse and other financial institutions unfolds. Investors will be keeping a close eye on any developments and adjusting their portfolios accordingly.
In conclusion, Credit Suisse’s financial troubles have caused unease in world markets, leading to lower oil prices. The situation is not unique, with other banks and financial institutions also facing financial difficulties. The oil market is likely to remain volatile in the coming weeks as investors adjust their portfolios to the changing situation.