Global benchmark Brent crude tumbled $7 to below $100 a barrel on Tuesday on a strengthening dollar, demand-sapping Covid-19 curbs in top crude importer China, and rising fears of a global economic slowdown.
The sharp drop followed a month of volatile trading in which investors have sold oil positions on worries that aggressive interest rate hikes to stem inflation will spur an economic downturn that will pull the rug out from oil demand.
Brent crude futures were down $6.87, or 6.4%, at $100.22 a barrel by 1615 GMT. US West Texas Intermediate crude was down $7.36, or 7%, at $96.74. Oil prices are facing extreme pressure “as a defensive posture continues with consumer sentiment still in a depressed mode along with Covid re-surface in China,” said Dennis Kissler, Senior Vice President for Trading at BOK Financial.
A record high dollar was triggering more selling liquidation, Kissler added. Oil is generally priced in US dollars, so a stronger greenback makes the commodity more expensive to holders of other currencies