Oil prices gave up overnight gains to slump on Wednesday as fears of an impending recession in the US and its impact on global economic momentum amid rising inflation outweighed supply concerns.
Brent, the global benchmark for two thirds of the world’s oil, fell by 4.03 per cent to $110 a barrel at 12.33pm UAE time. West Texas Intermediate, the gauge that tracks US crude, slumped 4.52 per cent to $104.60 a barrel.
Oil is headed for a monthly loss after tumbling last week following the US Federal Reserve’s move to increase its policy rate by a larger-than-expected three quarters of a percentage point.
It was the third interest rate rise in three months and the biggest since 1994. However, the pace of the rate increases has stoked fears of a recession in the world’s biggest economy that could further slow global economic growth. A recession in the US could force the world economy to contract and significantly dent energy demand.
Economists and industry leaders — from Nouriel Roubini to Tesla chief executive Elon Musk — have warned of the growing likelihood that the US will fall into a recession.