Oil prices took a steep dive on Monday as concerns over interest rate hikes and inflation gripped the markets.
Brent crude oil fell by $2.58 to $70.12 a barrel, while U.S. West Texas Intermediate crude fell by $2.67 to $66.36 a barrel.
The market jitters were sparked by comments from Federal Reserve Chair Jerome Powell last week, in which he signaled that the central bank may begin to taper its bond-buying program sooner than expected to combat inflation.
This led to fears that interest rates would rise sooner than anticipated, which could weigh on economic growth and oil demand.
Meanwhile, concerns over inflation have been mounting as the global economy rebounds from the pandemic. Supply chain disruptions, labor shortages, and rising commodity prices have all contributed to higher inflation, which could lead to a slowdown in consumer spending and further economic uncertainty.
The impact of these factors was felt across the energy sector, with shares in major oil companies like Exxon Mobil and Chevron falling by more than 2% on Monday.
The decline in oil prices is also having a ripple effect on other commodity markets, with copper, gold, and silver all falling on fears of a global economic slowdown.
However, not all analysts are bearish on oil prices. Some point to the continued recovery in global oil demand, which is expected to increase by 5.4 million barrels per day this year, according to the International Energy Agency.
They also note that OPEC+ is maintaining its production cuts, which could help to support prices.
The future of oil prices remains uncertain, with a mix of economic and geopolitical factors at play. Investors will need to stay attuned to the latest economic data and market indicators to make informed investment decisions in this volatile market.
