Oil falls more than 2% as investors assess recession risk

Oil prices continued to decline on Thursday, dropping more than 2 percent as investors reassessed the risk of recession and fuel demand, as major economies raised interest rates.

US West Texas Intermediate crude futures fell $2.6, or 2.7 percent, to $103.46 a barrel by 0330 GMT. Brent crude futures fell $2.5, or 2.3 percent, to $109.22 a barrel.

The benchmark crude fell by as much as three dollars a barrel in early Asian trading, after it fell by about three percent in the previous session. Both are at their lowest levels since mid-May.

Investors continue to appreciate how worried they should be about the possibility of central banks driving the global economy into a recession as they try to curb inflation by raising interest rates.

US Federal Reserve Chairman Jerome Powell said on Wednesday the bank is not trying to cause a recession as it tries to curb inflation, but is fully committed to keeping prices under control even if that raises the risk of recession.

Russian President Vladimir Putin said on Wednesday that Russia was in the process of rerouting its trade and oil exports to countries from the BRICS group of emerging economies due to Western sanctions.

China’s imports of Russian crude oil in May rose 55 percent from a year earlier, setting a record.

Meanwhile, US President Joe Biden called on Congress on Wednesday to pass a three-month moratorium on the federal gasoline tax to help combat record-high prices at gas stations.