On June 24, oil prices took a dive after nearly 52% of Britons voted
to leave the European Union in a nationwide referendum. Oil prices
initially slumped by more than 6%, as traders feared a wider economic
slowdown that could reduce oil demand.
Brent crude LCOc1 was down $1.91 at $49 a barrel at 0849 GMT. US
crude CLc1 was down $1.87 at $48.25 a barrel, according to Reuters.
Earlier in the day, both contracts were down by more than $3, or over
6%, the biggest intra-day declines for both since April 18, when a
meeting of top global oil producers failed to agree on an output freeze.
London-based energy expert Manouchehr Takin told New Europe by phone
on June 24 that the Britons’ decision to leave the EU creates
pessimistic expectations of demand for oil, causing the price to fall.
“The general view is that with Brexit, the European economy and the
British economy will slow down and people have talked of recession, of
even a split in the European Union itself over the coming years and so
there is a great uncertainty in the business community, in the
investment community and that uncertainty would mean the activity,
economic growth will be slowing down and demand for energy and oil will
be slowing down,” Takin said.
Moreover, the prospect of supply is still continuing despite
short-term disruptions caused by the forest fires in Canada, the
security issues in the Niger Delta and Venezuela, Takin told New Europe.
“Supply will come back,” he said, adding that Iran is expected to
gradually return to its pervious production levels now that the
sanctions are lifted, Iraqi production is increasing and the Nigeria
security situation will improve.
Oil giant BP reportedly said on June 24 its headquarters would remain
in the United Kingdom, despite the vote. “It is far too early to
understand the detailed implications of this decision and uncertainty is
never helpful for a business such as ours,” Reuters quoted BP as
saying.
https://www.neweurope.eu/article/brexit-knocks-wind-oil-prices/