Oil falls below $100 with a 9% drop

Oil futures traded heavy losses, taking prices below $100 for a long time, as growing concerns about the risk of an impending recession offset the supply hit from strikes in Norway.

In particular, Brent for September delivery is moving with losses of 11 dollars or 9.8% and sees its price falling to 102.4 dollars per barrel.

Similarly, US WTI crude for August delivery plunged 8.9% or $9.75 and has now lost $100 to settle at 98.64 a barrel.

“Oil continues to struggle to escape the current ‘recessionary malaise’ as the market moves from inflation to economic despair,” SPI Asset Management’s Stephen Innes said in a note.

It is also noted that both oil contracts ended June lower, breaking a six-month bullish streak as fears of an impending recession.

In the same vein, Citi said in a note today that Brent could see its price sink as low as $65 a barrel by the end of the year if the US economy slips into recession.

“In a recessionary scenario with rising unemployment, household and business bankruptcies, commodities will follow the downward cost curve which will deflate and profit margins will move into negative territory leading to supply cuts,” the bank’s analysts pointed out.

It is worth noting that Citi’s pessimistic assessment is one of the few for the oil market, when other investment firms such as Goldman have set the price forecast at $140, while JPMorgan made a nightmare estimate of up to $380 a barrel.

Crude prices have soared since Russia invaded Ukraine, raising concerns of global shortages given Moscow’s role as a key supplier of the commodity, especially to Europe.

WTI surged as high as $130.5 a barrel in March, while Brent touched $140, the highest level of any contract since 2008.

Notably, today’s plunge comes despite the start of a strike by mining rig workers demanding higher wages, which is expected to further squeeze already tight supply.