Brent oil futures closed below $100 a barrel for the first time in three months on Tuesday as recession concerns cloud the near-term outlook for crude oil demand.
The contract for the international benchmark oil for delivery in September fell 7.1 percent to $99.49 a barrel as the market responded to concerns over further China Covid-19 restrictions and the slowdown in Europe and the United States States focused.
The US benchmark West Texas Intermediate fell 7.9 percent to $95.84 a barrel.
Brent’s fall below the psychologically important $100 mark came shortly after the euro currency fell to parity with the US dollar for the first time in almost 20 years. Russia halted gas supplies to Europe, fueling fears of a eurozone recession.
The slump in the foreign exchange market “raises concerns that Europe is slipping into recession and that interest rates will have to be raised, which could slow demand for oil,” said Andy Lipow of Lipow Oil Associates. “There are also concerns about a shutdown of China.”
Despite concerns about the weakening economic outlook, analysts have warned that global oil inventories remain low by historical standards, meaning the market could struggle to meet demand if there is a supply disruption.
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