Coronavirus: Oil prices rise 5% as Fed moves to support economy

24 March 2020 (Last Updated March 24th, 2020 13:20)

Oil prices made a 5% rise to more than $28 a barrel on Tuesday. Prices climbed when the US Federal Reserve took steps to counter the coronavirus downturn.

Coronavirus: Oil prices rise 5% as Fed moves to support economy
US President Donald Trump said that the supply cut deal could save jobs in the US energy sector. Credit: skeeze from Pixabay.

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Oil prices made a 5% rise to more than $28 a barrel on Tuesday, as the US Federal Reserve took steps to counter the coronavirus downturn. Hopes of a $2tn aid package from the US also supported the price rise.

According to Reuters, Brent crude futures were up by $1.38 a barrel, to $28.41 a barrel. This 5.1% rise mirrored a 6.6% gain for US West Texas Intermediate prices. These increased by $1.54, to $24.90.

The news agency quoted an OANDA senior market analyst as saying: “Oil is clawing its way higher, mainly on the back of the weaker dollar that stemmed from the Fed’s unprecedented measure.”

Last night, UK Prime Minister Boris Johnson announced more stringent, semi-lockdown measures to encourage social distancing.

a demand reduction at the start of the Covid-19 pandemic has caused the current weak oil prices. The collapse of a supply cut agreement proposed by the Organization of the Petroleum Exporting Countries (OPEC) further sunk oil prices.

This led to a price war between Saudi Arabia and Russia. The countries have both increased oil production, leading to over-production suppressing oil prices.

Meanwhile, investors are awaiting supply report from industry group the American Petroleum Institute (API), which will give insight to the price war’s affect on the American industry.

Coronavirus global impact

Confirmed cases from the Covid-19 virus stand at 351,377. Global deaths from have crossed 15,340. About 100,524 are reported to have recovered from the virus.