(Ecofin Agency) - The prices of crude oil in the global market have dropped for the first time in a week, falling below the $48 a barrel mark.Brent crude has hit $47.6 a barrel, dropping by as much as 6.5 per cent while US crude was down $2.40 at $47.71 a barrel, as UK voted by 52% to 48% to leave the European Union following 43 years in a historic referendum.

These results have left the market in huge uncertainty. Sterling fell by as much as 11% and was last at around $1.35. The euro fell below $1.10 while the dollar fell to as low as 99.08 yen.“In the interim, it's down for everything from equities to oil. Bad economies in the UK and Europe is not good for oil,” said IHS oil analyst Victor Shum.

According to him, the result leaves the crude oil market in bondage. He stated that even if the matter is settled soon prices are likely to fluctuate, even if around a mark of $50 per barrel.

The prices of crude oil rose more than 30% this year after the failure of the Organization of Petroleum Exporting Countries (OPEC) to cut or freeze production as well as the supply disruption from Nigeria and Canada.“Putting Brexit aside, the new oil order today is where we have prices and costs regulating the market not OPEC, so we're going to see more price volatility than before. The fact that the oil market is re-balancing is still going to support oil prices at close to $50,” Shum told Reuters.

Crude oil prices in May recovered sharply as outages from Canada and Nigeria threatened to upset a market moving back toward balance since mid-2014. Nigerian crude oil production is at multi-year lows because of militant threats in the Niger Delta region of the country.

As a matter of fact, this vote, according to analyst, might affect African economies including South Africa’s.The Brexit vote would probably cause rand weakness and shave about 0.1% off South Africa’s GDP, research revealed.

Even if the UK economy reduce by 5% and UK imports fell by 10%, the anticipated drop in emerging-market exports to the UK would be equivalent to just 0.1% of total emerging markets’ gross domestic product (GDP), Capital Economics economists Neil Shearing and Liza Ermolenko disclosed.

Anita Fatunji