March 21, 2023: On Monday, Brent oil prices logged failures, dropping below $72 per barrel in intraday trade between turmoil in the banking sector.

The Brent contract with May delivery traded at $71.64 per barrel at 11:00, decreased by $1.33 per barrel from the Friday close. It was last down 54 cents, or 0.74%, to $72.43.

Oil prices have started under pressure from a scene in the Western banking sector, which has witnessed the downfall of tech-beginning-focused Silicon Valley Bank and the takeover of Credit Suisse by Swiss rival UBS in two weeks.

Two sources within the influential OPEC+ alliance signalled to CNBC at the end of the previous week that banking uncertainty was coming into fears of another fiscal collapse to the tune of the 2008 crisis.

OPEC+ delegates could only comment on the condition of anonymity, as they are not permitted to discuss the topic publicly.

One of the aspects noted that the drop was temporary and unavailable by supply-demand fundamentals, which surrounds the physical commodity but stresses the need to monitor the possible effect on central bank interest prices and inflation. The European Central Bank is charging ahead with a further price hike of 50 basis points from March 16, while the U.S. Federal Reserve is because of reaching its own rate decision this week.

Over the previous year, OPEC+ has championed stability in the oil price landscape to boost long-term investment in spare capacity and avoid supply. An OPEC+ ministerial technical committee is coming set to adjourn on April 3.

In a note from March 15, UBS analysts indicated that the broader financial businesses turbulence was unlikely to affect crude oil production prices but flagged that “in periods of elevated volatility, investors tend to pull out of risky assets such as oil and invest in safer corners of the market.”

It further stated that the options market is intensifying the decline in oil prices via delta-hedging plays.