Oil prices have tumbled almost 30% in 2 months. Here's why, and what could happen next.

Oil prices have fallen sharply since June. picture alliance/Getty Images
Oil prices have plummeted over the past two months, with Brent and WTI crudes down more than 20% since June.
The three Rs help explain why: recession fears, resilient Russian production, and declining demand.
Analysts are divided on what's next, with some predicting a rebound and others expecting the decline to continue.
Oil prices have come back down to earth following Russia's invasion of Ukraine, to the relief of politicians, businesses and motorists everywhere.
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WTI crude, the US benchmark oil price, is down 28% from its last highs in early June, trading at around $90 a barrel on Wednesday.
Brent crude, the international benchmark, is down 24% from its own June highs, trading at around $95 a barrel on Wednesday. It is down more than 30% from its March high of nearly $140.
So why are oil prices falling? The three Rs are to blame: recession fears, Russia's resilience and slowing demand. However, no one is quite sure what comes next.
The world economy is slowing down
The key factor pushing prices lower is growing fears that the world's major economies will plunge into recession sometime next year. Of course, when the economy slows down, demand for energy falls.
Last month, data showed that the US economy contracted for two straight quarters in the first half of the year. Elsewhere, the UK and the eurozone are likely to slide into brutal recessions.
"All the talk of a recession has caught up with crude oil prices over the summer, forcing a significant correction that will be welcomed by those watching in horror as they fill up their cars," said Craig Erlam, senior market analyst at the currency platform Oanda.
Some analysts say the dollar's strength has also weighed on global demand and cooled prices. Oil is priced in dollars, and the rise in the greenback this year has made the commodity prohibitively expensive for some buyers, the theory goes.
Russian production remained robust
A lesser-noticed factor is that Russian production has remained stronger than analysts had expected.
Sanctions against Russia following its invasion of Ukraine in late February caused many to drastically scale back their expectations for the country's production, prompting traders to hike prices.
However, the expected decline in Russian production is yet to come. Russia has increased sales to India and China and domestic demand has been strong over the summer. That means there was more oil in circulation than expected.
"The market consensus has been overly pessimistic about Russia's ability to redirect volume to other buyers," analysts at JPMorgan said in a recent note.
US drivers stay at home
On the demand side of the equation, there are signs that appetite for oil has not been as strong as many expected, even ahead of the expected slowdown in growth. For example, the US Energy Information Administration said last month that gasoline demand for the week ended July 8 was its lowest season since 1996.
Meanwhile, President Joe Biden's releases from Strategic Oil Reserves, aimed at reducing gasoline costs, also added to downward pressure on crude prices, analysts said.
Analysts are divided on the prospects
Wall Street is undecided whether prices will continue to fall or recover.
Analysts at Citigroup have said prices could fall as low as $65 by the end of the year if a bad recession hits the global economy. Even without a recession, Citi expects prices to fall to around $85 by the end of the year.
Goldman Sachs downgraded its forecasts this week but said it still expects oil prices to recover, not least because it thinks demand is stronger than many believe. Goldman said Brent crude will rise to $110 in the third quarter and $125 in the fourth.
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