Oil Sinks By 3% As Economic Slowdown Fears Weigh On Market

Oil prices dipped by nearly 3% early on Tuesday, losing around $3 from Monday’s close, as fears of a global economic slowdown intensified while fears of a loss of supply from OPEC’s second-largest producer, Iraq, abated.

As of 8:43 a.m. ET on Tuesday, Brent Crude was down by 2.82% at $102.19. The U.S. benchmark, WTI Crude, traded down 2.46% on the day at $94.62.

Oil prices saw on Monday their biggest daily gain in nearly six weeks after Brent hit $104 per barrel yesterday due to concerns about supply from both Libya and Iraq, as well as the possibility of an OPEC+ production cut.

On Tuesday, concerns about demand prevailed, with prices losing ground amid continuous fears that aggressive interest rate hikes from central banks, including the Fed, would slow down economies for a prolonged period of time.

In a Friday speech, Federal Reserve’s Chair Jerome Powell said that large interest rate hikes could continue and could slow the economy “for some time,” and that rates could be higher for longer.

In addition, the oil market swept aside, for now, concerns that the deadly clashes in Iraq would hurt the country’s oil industry and exports.

At least 15 people have been killed and scores of others wounded in overnight fighting in the Iraqi capital, following protestors’ storming of the presidential palace on Monday. Fighting broke out in and around the Green Zone after hundreds of protesters loyal to powerful Shi’ite cleric Moqtada al-Sadar tore down cement barriers and charged through the Republican Palace following the cleric’s announcement on Monday that he would withdraw from politics.

Iraq can ramp up its oil exports and will not decline any requests for more crude, Alaa Al-Yassiri, director general of state oil marketing company SOMO, told Bloomberg in an interview on Tuesday. SOMO could even redirect more Iraqi oil to Europe if necessary, a source at the marketing firm told Reuters today.