Oil prices fall due to recession worries
Prospects of aggressive rate hikes by Federal Reserve feed expectations of global economic slowdown
Oil prices fell on Friday over the heightened anguish of an economic recession and slowdown in the global economy, fueling lower demand prospects.
International benchmark Brent crude was trading at $108.73 per barrel at 0650 GMT for a 0.27% decrease after closing the previous session at $109.03 a barrel.
American benchmark West Texas Intermediate (WTI) was at $105.35 per barrel at the same time for a 0.38% fall after the previous session closed at $105.76 a barrel.
As central banks struggle to tame high inflation, prospects of aggressive rate hikes by the Federal Reserve fuel recession fears in the world's biggest oil consumer.
Although OPEC+ producers decided to continue their previously agreed output plan on Thursday, uncertainty over the group’s policy in the coming months also weighed on prices.
The world's biggest oil producers agreed Thursday to adhere to the current plan of increasing output by 648,000 barrels per day (bpd) in August, which they said was "in view of current oil market fundamentals and the consensus on its outlook."
OPEC+ had reduced its daily crude oil production by approximately 10 million barrels in April 2020 due to the sharp decline in demand following the emergence of the COVID-19 pandemic.
As global economies and oil demand started to recover, the group also began to ease these cuts incrementally from April 2021.
Finally, an anticipated trip by US President Joe Biden to Saudi Arabia in mid-July also increased prospects of more output from Saudi Arabia to curb soaring energy prices.