Silicon Valley Bank Collapse: Brent crude falls below $80 for the first time since February 2023
The collapse of Silicon Valley Bank has affected oil markets as Brent crude fell below $80 per barrel on Monday, March 13. As of 1:30 PM GMT+1, Brent crude was $79.20 per barrel.
Note that this is the first time this has happened since February 2023. And Reuters attributed the decline to fears of a fresh financial crisis.
More details: Energy investors fear that the SVB collapse is the worst since the 2008 financial crisis. However, it remains to be seen, the extent the SVB collapse will have on oil prices in the course of the week.
According to Bloomberg, the collapse of Silicon Valley Bank has added further turbulence in energy markets. Bloomberg stated:
- “The failure of the bank — the worst since the 2008 financial crisis — is reverberating across markets, hitting equities around the world and driving down the dollar. US authorities are rushing to strengthen confidence in the banking system and prevent contagion, while Goldman Sachs Group Inc. scrapped its call for a Federal Reserve interest-rate hike next week due to the turmoil.
- “Oil been whipsawed this year by concerns over America’s tightening monetary policy and optimism around China’s economic recovery. Many market watchers are still bullish on the longer-term outlook.”
What you should know: Before the SVB collapse, the global oil market showed signs of improvement, with oil prices rising following China’s decision to reopen its economy after months of Cpovid-19 lockdown. So, oil market players were making more profits from higher oil prices.
Since the beginning of 2023, the International Energy Agency (IEA) as well as other energy stakeholders have resolved that China’s reopening signifies more oil demand and higher oil prices.
Last week, the global oil market was impacted by the announcement of further interest rate hikes by Federal Reserve officials and now the impact has been widened by the collapse of SVB.
Earlier today, Nairametrics reported that HSBC bought the embattled United Kingdom arm of Silicon Valley Bank (SVB UK), but the fate of the United States parent company remains uncertain. Meanwhile, over the weekend, the United States Treasury said that all deposits in SVB are safe, however, officials are said to be looking for a buyer for the 16th largest US bank.
Nairametrics also earlier reported that the United States Treasury Secretary, Janet Yellen had announced that the government had no plans to bail out SVB but was working closely with regulators to help the bank.