Muscat – Oman crude oil futures closed Wednesday under US$100 per barrel for the first time in three months as global recession worries cloud the near-term outlook for oil demand.

Oman crude price for September delivery dropped 3.3 per cent to US$98.95 per barrel on Wednesday at the Dubai Mercantile Exchange.

Global oil benchmarks Brent crude and WTI had closed Tuesday under US$100 a barrel for the first time since April. Brent crude for September delivery tumbled 7.1 per cent to US$99.49 a barrel as the market focused on worries about further China Covid-19 restrictions and the slowdown in Europe and the United States.

The US benchmark, West Texas Intermediate, fell 7.9 per cent to finish at US$95.84 a barrel on Tuesday. Both Brent and WTI edged up on Wednesday and gains were limited by a US supply report showing rising inventories and caution ahead of US inflation data.

The drop in Brent below the psychologically important US$100 level came shortly after the euro currency fell to parity with the US dollar for the first time in nearly 20 years Russia cut off gas supplies to Europe, heightening fears of a recession in the eurozone.

The drop in the currency market is “raising concerns that Europe is going into recession, and that they’re going to have to raise interest rates, which could slow the demand for oil,” said Andy Lipow of Lipow Oil Associates. “There’s also concerns about China shutting down.”

Despite worries about the weakening economic outlook, analysts have cautioned that global oil inventories remain low by historic standards, meaning the market could have a tough time meeting demand if there is a supply disruption.

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