Oil prices rose on Wednesday in international markets after the U.S. government’s ‘heavy’ $85 billion aid package to rescue insurer American International Group (AIG) seemingly calmed global financial markets.
The price of oil in the U.S. market increased by $2.77 to $93.92 per barrel, after briefly touching $95 per barrel. In the London market, the barrel rose by $2.53 to $91.75 per barrel. Prices had fallen by more than $10 in the previous two days, alongside a sharp decline in stock prices on global markets following the bankruptcy of U.S. investment bank Lehman Brothers, and fears related to the survival of the financial services group AIG. Oil has decreased by more than a third from the record level of $147.27 recorded on July 11, partly due to reduced demand in the largest consumer, the United States, where economic growth has slowed.
The decline accelerated this week as a result of turmoil in the financial market due to Lehman’s collapse and AIG’s problems. “Everyone fears that there will be a major collapse of the financial sector that will affect the economy. Now they hope that we will overcome the situation with AIG and that may be raising prices,” said Anthony Nunan from Tokyo’s Mitsubishi. AIG’s problems and Lehman Brothers’ bankruptcy prompted investors to seek refuge for capital in government bonds and gold, which rose by 0.7 percent or $5.15 to $782.7 per ounce on Wednesday.
