Here’s what to expect from oil post-Brexit: S&P Global

SINGAPORE (June 26): Oil prices weren’t spared after the UK voted for Brexit on Thursday, with West Texas Intermediate (WTI) crude falling by more than 5% to US$47.56 a barrel. Spooked by the renewed uncertainty now surrounding the global economy, investors fled for safety by moving funds into US dollar assets, which pushed down the price of oil.

With the UK now at risk of recession, markets are now expecting that global demand and GDP growth will come under pressure. That, in turn, could keep oil prices subdued or trending downwards. “To the extent that GDP growth dissipates, crude oil prices could again suffer,” writes Stewart Glickman, an analyst at S&P Global.

Oil prices could also be impacted by disruptions to demand from the eurozone, which consumes some 15% of global crude oil supply. According to S&P estimates, Brexit could potentially compromise up to 0.5 percentage points of the region’s GDP growth in 2017.

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