Oil tumbles more than 5% after Monday’s rally

Oil prices ended deep red on Tuesday amid concerns over the outlook for the global economy and energy demand amid an aggressive shift by the world’s biggest central banks to tighter monetary policies to control inflation.

Specifically, the October crude contract lost $5.37 or 5.5% and closed at $91.64 a barrel on the New York Stock Exchange. This is the lowest close since August 22. Prices gained 4.2% on Monday, taking the contract to its highest close since late July.

October Brent meanwhile fell $5.78, or 5.5%, to $99.31 a barrel on ICE Futures, also the lowest since August 22, after Monday’s 4.1% jump.

The most active November contract lost $5.09, or nearly 5%, to settle at $97.84 a barrel.

A barrage of statements from central bankers on both sides of the Atlantic has made it clear that the shift to tighter policies will continue next year to tackle runaway inflation, despite risks to the global growth outlook.

Analysts are now warning of the risk of recession in the US and Europe, which will deal a big blow to fuel demand.

Today’s slide ends the rally of the previous days that was sparked by fears of already tight supply on global markets, with Saudi Arabia even leaving open the possibility of further OPEC+ production cuts.

However, this was more about the case of bringing Iran back into the market, a possibility that appears to be receding as Tehran said today that it will not accept “excessive demands” from the UN Atomic Energy Agency (IAEA).

At the same time, an OPEC+ source told the Russian news agency TASS that OPEC and its allies are not currently discussing the possibility of production cuts.

At the same time, the output of Iraq – OPEC’s second largest exporter – has so far not been affected by the political unrest in the country, as the market had feared.