# Oil falls more than 2% on recession and China COVID fears
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-11
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Oil Prices Tumble Amid Recession Fears and COVID-19 Cases
Meta Description: Oil prices drop over 2% as recession worries and COVID-19 spike in China dampen global demand. Experts warn of potential economic slowdown and inflation issues.
URL: https://financedigest.com/oil-falls-more-than-2-on-recession-and-china-covid-fearshtml

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By Alex Lawler

LONDON (Reuters) – Oil slid more than 2% on Tuesday, extending losses of nearly 2% in the previous session, as recession fears and a flare-up in COVID-19 cases in China raised concern 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 that inflation remains a continuing problem.

Brent crude fell $2.30, or 2.4%, to $93.89 a barrel by 1006 GMT. U.S. West Texas Intermediate crude dropped $2.12, or 2.3%, to $89.01.

There is [growing pessimism in the markets](https://www.financedigest.com/dental-implants-and-prosthetics-market-market-to-grow-at-robust-cagr-by-2028.html "Dental Implants and Prosthetics Market Market to Grow at Robust CAGR by 2028") now,” said Craig Erlam of brokerage OANDA.

[Oil has dropped sharply on economic fears](https://www.financedigest.com/oil-rises-on-demand-hopes-as-banking-crisis-fears-subside.html "Oil rises on demand hopes as banking crisis fears subside") after surging earlier in 2022, when Brent came close to its record high of $147 as Russia’s invasion of Ukraine added to supply concerns.

[“Warnings after warnings are being issued when it comes to global economic](https://www.financedigest.com/global-economic-crisis-strangling-progress-for-poor-warns-u-n-development-chief.html "Global economic crisis strangling progress for poor, warns U.N. development chief") growth,” said Avatrade analyst Naeem Aslam.

Those worries aside, [fears of a further hit](https://www.financedigest.com/uk-economy-set-for-smaller-hit-in-2023-than-previously-feared-imf.html "UK economy set for smaller hit in 2023 than previously feared – IMF") to demand in China also weighed. Authorities have stepped up coronavirus [testing in Shanghai](https://www.financedigest.com/in-shanghai-lockdown-blues-make-way-for-covid-testing-gripes.html "In Shanghai, lockdown blues make way for COVID testing gripes") and other large cities as COVID-19 infections rise again.

[Oil also came under pressure from a strong dollar](https://www.financedigest.com/oil-slumps-on-economic-data-stronger-u-s-dollar.html "Oil slumps on economic data, stronger U.S. dollar"), which hit multi-year highs on worries about increases to interest rates and escalation of the Ukraine war.

A strong dollar makes oil more expensive for buyers with other currencies and tends to [weigh on risk](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high") 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](https://www.financedigest.com/toyotas-july-global-vehicle-output-drops-again-puts-annual-target-in-doubt.html "Toyota’s July global vehicle output drops again, puts annual target in doubt") by 2 million barrels per day.

An undersupply is even looming next year because the production [cut is supposed to apply until the end](https://www.financedigest.com/hp-to-cut-about-12-jobs-by-end-of-fiscal-2025.html "HP to cut about 12% jobs by end of fiscal 2025") of 2023, according to the OPEC+ decision,” a Commerzbank report said.

(Reporting by Alex Lawler; Additional reporting by Isabel Kua; Editing by David Goodman)


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