Oil Tumbles Below $110 As Fears Of Recession Intensify

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  • Brent slumps below $110 per barrel as markets fear a looming recession.
  • Growing number of analysts think that rates hikes of the Fed may not come with a soft landing.
  • A strong U.S. dollar continues to weigh on oil prices.

Oil prices dipped by 6 percent early on Wednesday, with Brent slumping below $110 a barrel, as the market fears a looming recession would drive down global oil demand.

As of 9:10 a.m. EST on Wednesday, WTI Crude was down below the $105 a barrel mark and traded at $102.77, down by 6.24 percent on the day. The international benchmark, Brent Crude, had plunged below the $110 threshold and was at $108.18, down by 5.70 percent.

A growing number of analysts and economists now say that the Fed’s attempts to rein in inflation with aggressive interest rate hikes may not produce the policy makers’ goal of a “soft landing” of the U.S. economy and will actually lead to a recession within a year or a year and a half.

Moreover, the strong U.S. dollar is also weighing on oil prices, as a strong greenback makes oil purchases more expensive for holders of other currencies. A rising U.S. dollar could impact the level of imports at oil-importing countries.

The Biden Administration – locked in a dispute with the U.S. oil industry over whose fault $5 a gallon gasoline price in America is – is pushing for a temporary federal gas tax holiday, also likely weighing on oil prices.

“In addition to a recovery in Libya’s production, broader macroeconomic developments, namely the rising risk of a recession hurting demand has in recent sessions managed to more than offset a continued tight supply outlook driven by sanctions, peak summer demand, and several OPEC+ producers struggling to raise output to agreed levels,” Saxo Bank said in a daily commentary on Wednesday.

“President Biden’s fight against high gasoline prices ahead of the midterm election has also received some attention, although a potential gasoline tax holiday, while supporting consumers, would support demand, thereby prolong the period of tightness,” the bank’s strategists said.

NB: Tsvetana Paraskova wrote this article for Oilprice.com

Tsvetana Paraskova
Tsvetana Paraskova
Hamilton Nwosa is an experienced, and committed communication, business, administrative, data and research specialist . His deep knowledge of the intersection between communication, business, data, and journalism are quite profound. His passion for professional excellence remains the guiding principle of his work, and in the course of his career spanning sectors such as administration, tourism, business management, communication and journalism, Hamilton has won key awards. He is a delightful writer, researcher and data analyst. He loves team-work, problem-solving, organizational management, communication strategy, and enjoys travelling. He can be reached at: hamilton_68@yahoo.com

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