Oil prices fell sharply on Tuesday on a strong dollar, demand-sapping COVID-19 curbs in top crude importer China and fears of a global economic slowdown.
Brent crude futures were down by $4.78, or 4.5%, at $102.32 a barrel by 1112 GMT, having earlier sunk as low as $101.48. U.S. West Texas Intermediate crude was down $4.91, or 4.7%, at $99.18 after hitting a session low of $98.40.
The euro lost ground on Tuesday, trading near parity with the dollar, while stock markets fell on the prospect of rising interest rates and worries over economies worldwide.
A stronger U.S. currency usually weighs on oil because it makes the dollar-priced commodity more expensive for holders of other currencies.
“In the West, the combination of high energy prices and rising interest rates is fuelling concerns about a recession that would have a serious impact on oil demand,” Commerzbank said.
Renewed COVID-19 mobility curbs in China were also weighing on prices, the bank said.
Multiple Chinese cities are adopting fresh COVID-19 curbs, from business shutdown to broader lockdowns in an effort to rein in new infections from the highly infectious BA.5.2.1 subvariant of the virus.U.S. President Joe Biden will make the case for higher oil production from OPEC when he meets Gulf leaders in Saudi Arabia this week, White House National Security Adviser Jake Sullivan said on Monday.“Little hope is being assigned to Biden’s visit to Saudi Arabia unlocking more production from them or the UAE,” Jeffrey Halley, OANDA’s senior market analyst for Asia Pacific, said in a note.