Oil price slumps as Joe Biden pushes for US fuel cost cuts

West Texas Intermediate futures slid 3.4% as data showing a sharp economic contraction in the world’s top oil importer outweighed growing expectations that Europe may agree to curb crude purchases from Russia. Beijing is set to close gyms and cinemas over the Labor holiday that lasts through Wednesday, and Shanghai will keep virus measures in place.

Oil prices tumbled on Wednesday, amid a push by U.S. President, Joe Biden, to bring down soaring fuel costs, including pressure on the country’s major energy firms to help ease the pain for drivers during peak summer consumption.

Brent crude futures dropped 4.51 percent to $109.98 a barrel at 09.00 GMT+1.

US West Texas Intermediate (WTI) crude futures, also slid 5.46 percent, at $104.1 a barrel. Similarly, Brent crude futures dropped $5.67, or 4.51%, to $109.98 a barrel.

Biden is expected to suspend the 18.4 cents a gallon federal tax on gasoline, according to a report by Reuters.

“I think the non-stop Biden headlines, with the administration seemingly in inflation panic mode, have played a part in the latest sell-off as investors hate any uncertainty, even if irrational in the context of the known supply concerns”, Stephen Innes, managing partner at SPI Asset Management, said in a note.

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On Thursday, seven oil companies would meet Biden under pressure from the White House to drive down fuel prices as they make record profits.

Demand is not back to pre-COVID levels and supply is expected to lag demand growth, keeping the market tight, trading giant Vitol had said.

“From here, a more likely outcome is a widening of the Brent premium over WTI. Brent is the internationally traded benchmark, and in the real world, supplies remain tight”, said Jeffrey Halley, an analyst at energy consultancy OANDA.

For Nigeria, perennial challenges continue to dwindle the country’s oil production capacity, leading to petrol scarcity.

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On Monday, queues for petrol resurfaced in Lagos days after scarcity reared its head in Ibadan, Oyo state.

Nigeria is currently experiencing low crude oil production. In May, oil output dropped to a lowest figure of 1.02 million barrels per day.

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