WTI crude falls 5% on recession worries

22 Jun 2022 , 01:13 PM

As traders’ concerns about the impact of a potential recession brought on by a significant increase in interest rates intended to control inflation rise, oil prices fell more than 5% on Wednesday.

While Brent fell 4.70% to $109.26 per barrel, West Texas Intermediate fell 5.09% to $103.92 per barrel. Concerns that the Ukraine war’s limited supply won’t be able to fulfill demand from the world’s biggest economies, particularly China as it emerges from months of lockdowns, have pushed crude to rise in recent months to multi-year highs.

However, as a result of the surge in energy prices, which helped push inflation to levels last seen in the 1980s, central banks have been compelled to increase borrowing costs. Because of this, fears that economies all around the world are heading into a recession have grown, sending shivers through the oil market.

This week’s two-day congressional appearance by Federal Reserve chairman Jerome Powell will be watched closely to get a sense of how officials intend to combat skyrocketing prices.