Amid rising fears of economic slowdown, crude oil prices at 3-month low

New Delhi, July 13: Amid rising fears of an economic slowdown, global crude oil prices have fallen further to touch the three-month low.

Brent crude futures dropped 68 cents, or 0.7 per cent, to $98.81 a barrel while the US West Texas Intermediate crude declined 72 cents, or 0.8 per cent, at $95.12 which is the lowest in the past three months, as per a report on Reuters.

The supply chain disruptions in oil persisted since the conflict between Ukraine and Russia broke out. It caused a rapid rise in crude oil and other essential commodities' prices.

Before the war started, crude oil was around USD 90 per barrel and rose to as high as USD 115 in less than a week in late February. A brief decline in prices was observed at the end of March, and it went below USD 100 at the beginning of April.

The rising fears of a possible recession and the aggressive monetary policy tightening by various central banks are attributed to the latest fall in prices. These factors are essentially leading to weaker demand for crude oil, thereby contributing to the fall in their prices.

The rise in COVID cases and fresh lockdowns in China, which may reduce economic activities, are among the other factors which can be attributed to the decline in oil prices. Amid growing concerns about inflation, the US Fed raised its benchmark interest rate by 75 basis points at its latest meet. That followed a 25 basis points increase in March and a 50 basis points jump in May. In total, the US central bank has raised 1.5 percentage points on a cumulative basis.

Experts believe aggressive rate hikes is likely to continue in the upcoming meetings, which in turn may cause a recession in the US economy. In India, retail inflation has been over the Reserve Bank of India's upper tolerance band of 6 per cent for the sixth consecutive month in a row in June.

It has to be noted that India is a large importer of crude oil, and rising global crude oil prices had put an upward pressure on domestic inflation.