Brent records more than 2% loss over recession fears

Brent declined more than 2% during intraday trading on Monday over looming demand fears ahead of expected interest rate hikes by major economies, including the US.

International benchmark Brent crude traded at $88.82 per barrel at 04.11 p.m. local time (1311 GMT) for a 2.77% decrease from the closing price of $91.35 a barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) traded at $81.86 per barrel at the same time for a 3.42% loss after the previous session closed at $84.76 a barrel.

Having retreated marginally last week from recession fears and Covid-19 restrictions in China, prices started the week with unfolding demand woes, as persistent inflationary pressures worldwide are forcing central banks to take more hawkish monetary policy moves.

Expectations of such monetary policy decisions heightened after the US reported a higher-than-expected annual inflation rate of 8.3% in August.

The annual inflation rate in August for the eurozone reached a record high of 9.1%, driven by skyrocketing energy costs.

Analysts predict that central banks will preserve their policies of raising interest rates to stem inflation.

The dollar has also appreciated before the US Federal Reserve’s meeting next week, deterring investors from trading in more expensive US dollar-indexed oil.

The Fed is expected to raise interest rates by 75 basis points, however, a rise of 100 basis points is still on the table.

Dollar-indexed oil prices came under pressure from the rising value of the greenback.

The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc, rose 0.18% to 109.70.

Chinese authorities said on Sunday that Covid restrictions in the southwestern Chinese city of Chengdu would lift on Monday, easing demand concerns.

• Brent declined more than 2%