Oil prices fell about 2% on Tuesday, extending the previous session’s almost 2% decline, as recession fears and a flare-up in COVID-19 cases in China raised concerns over global demand.
World Bank President David Malpass and International Monetary Fund Managing Director Kristalina Georgieva warned on Monday of a growing risk of global recession and said inflation remains a continuing problem.
Those worries aside, fears of a further hit to demand in China also weighed. Authorities have stepped up coronavirus testing in Shanghai and other large cities as COVID-19 infections rise again.
Oil also came under pressure from a strong dollar, which hit multi-year highs on worries about interest rate increases and escalation of the Ukraine war.
A strong dollar makes oil more expensive for buyers with other currencies and tends to weigh on risk appetite.
Losses were limited, however, by a tight market and last week’s decision by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+, to lower their output target by 2 million barrels per day.
“An undersupply is even looming next year because the production cut is supposed to apply until the end of 2023, according to the OPEC+ decision,” a Commerzbank report said.
