Oil prices down almost $1 after fears assuaged
RIYADH, March 27, 2015 – The price of Brent crude fell $0.95 to $58.24 per barrel and US crude fell $0.98 to $50.45 per barrel on Friday morning. The sharp decline came after a 5-percent rise in oil prices on Thursday, the highest price since March 5.
The initial increase resulted from fears that Saudi Arabia’s military action in Yemen may interrupt trade at the Bab El Mandeb strait, through which about 7 percent of the world’s maritime oil shipments pass. This share is equivalent to about 3.8 million barrels equivalent of crude oil and petroleum products per day.
Some investment firms were sceptical of the effects of the military action on prices, with Goldman Sachs saying that oil tankers could use alternative routes to reach their ports of destination. The Wall Street Journal reported Franklin Templeton Investments portfolio manager Rob Christian as saying that the price spike was an “overreaction” and that “the market is still oversupplied.”