[International Oil Prices] Brent Crude Oil Falls 3.4% ... "Concerns Grow Over Demand Destruction From High Prices"

[Financial News]  \r\n
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Global oil prices fell on the 30th of last month local time.
Brent Crude Oil, the global benchmark that had closed at $118.03 per barrel the previous day, its highest level in four years, plunged 3.4% on the day.
The sharp rise appears to have triggered profit-taking, while concerns over slowing oil demand amid surging prices also weighed on the market.
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June Brent Crude Oil settled at $114.01 per barrel, down $4.02, or 3.41%, from the previous session.
June West Texas Intermediate crude oil (WTI), the U.S. benchmark, closed at $105.07 per barrel, down $1.81, or 1.69%.
According to CNBC, Brent Crude Oil surged to as high as $126 per barrel early in the session, marking its highest level since the start of the Iran war on Feb. 28.
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The steep rally first led to selling for profit.
With Brent Crude Oil and WTI having soared about 60% each since the Iran war, and prices climbing to an intraday high of $126 per barrel, investors rushed to lock in gains rather than wait for further upside.
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Concerns were also raised about oil demand destruction.
Warren Patterson, head of commodity strategy at ING Bank in the Netherlands, said in a research note that "the oil market has moved from excessive optimism ... to the reality of demand destruction."
He said the market had finally come to realize that the Strait of Hormuz had been blocked, disrupting oil supply and driving prices so high that the demand base was being eroded.
Patterson explained that "the longer the disruption lasts, the less room the market has to rely on inventories, and the greater the need for additional demand destruction." He added that "the only solution is high oil prices."
As supply disruptions drag on, it becomes harder to depend on oil inventories. Eventually, prices rise to a level that cuts consumption, forcing the market into a phase of demand destruction. Patterson said prices fell because the market is finally beginning to recognize that reality.
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Goldman Sachs estimated that the blockade of the Strait of Hormuz has slashed oil flows through the waterway to about 4% of normal levels. That means oil supply through the Strait of Hormuz has plunged 96%.
Goldman said the supply disruption would worsen further if the blockade continues.
Amid this short-term pressure, Goldman expected that the production boost from the United Arab Emirates' withdrawal from OPEC would have little immediate effect. Instead, it forecast that supply increases would gradually influence the market over the medium term.
The UAE declared on the 28th that it would leave OPEC starting May 1.
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dympna@fnnews.com Song Kyung-jae Reporter