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HomeBusinessOil prices plunge 4% with recession fears in focus By Reuters

Oil prices plunge 4% with recession fears in focus By Reuters


© Reuters. A general view shows the oil refinery of the company Lukoil in Volgograd, Russia April 22, 2022. REUTERS/REUTERS PHOTOGRAPHER

By Julia Payne

LONDON (Reuters) – Oil prices fell Friday to trade at levels not seen since January when it hit its highest level in two decades, amid demand fears as rising interest rates threatened to send major economies into recession.

futures were down $3.74, or 4.13%, to $86.72 a barrel at 1313 GMT. US West Texas Intermediate (WTI) crude futures also fell $3.98, or 4.77%, to $79.51 a barrel.

Brent and WTI first month contracts fell 5.28% and 6.80% respectively over the past week.

Global equities hit a two-year low on Friday, while the dollar index hit a two-decade high, putting downward pressure on oil.

“Weak European PMIs, growth concerns due to aggressive monetary policy tightening in the US and Europe are weighing on risky assets. Oil prices are not immune to those growth concerns,” said Giovanni Staunovo, an analyst at UBS.

A decline in activity across the eurozone sharpened in September, a survey found, suggesting a recession is on the way as consumers rein in spending to deal with a crisis in the cost of living.

“European stock indices end the week negative on fears that rate hikes will push major economies into recession,” PVM Oil Associates said in a note.

Russia on Friday launched referendums aimed at annexing four occupied regions of Ukraine, which Kiev called an illegal sham that it said included threats against residents if they did not vote.

After the US Federal Reserve hiked rates by a hefty 75 basis points on Wednesday, central banks around the world followed suit with hikes of their own, increasing the risk of economic slowdowns.

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In Britain, meanwhile, the pound fell to its 37-year low and government bonds collapsed after the new Chancellor of the Exchequer announced historic tax cuts and massive loan increases.

On the oil supply side, efforts to revive the 2015 Iran nuclear deal have stalled as Tehran pushes for the UN’s nuclear watchdog’s investigations to be closed, a senior U.S. State Department official said. of the Ministry of Foreign Affairs, which allayed expectations of a resurgence in Iranian exports.

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