US crude oil prices dipped below $100 on Tuesday to its lowest in two weeks as demand outlook was pressured by coronavirus lockdowns in China and growing recession risks, while a strong dollar made crude more expensive for buyers using other currencies.

US West Texas Intermediate crude fell $3.25, or 3.13%, to $99.85 a barrel. Brent crude was down $3.3, or 3.12%, at $102.62 a barrel by 1635 GMT.

Wall Street’s main indexes also turned lower in volatile trading on concerns over aggressive monetary tightening and slowing economic growth.

Early in the session, comments from the Saudi Arabian and UAE energy ministers boosted Brent and WTI up by over $1 a barrel.

“These are volatile times, the daily price bars are outsized these days,” said Again Capital LLC partner John Kilduff.

“As the EU continues to dither over whether or not they are going to embargo that Russian oil, that changes the calculus very much as well in both directions,” he added.

The EU Commission has delayed acting on the proposal. Unanimity is required to ban oil imports from Russia, and while a French minister said EU members could reach a deal this week, Hungary has dug in its heels opposing an embargo.

Also, some European economies could suffer distress if Russian oil imports were curtailed further. If Russia retaliated by cutting off gas supplies, economies in emerging Europe, central Asia and north Africa might slide back to pre-pandemic levels, the European Bank for Reconstruction and Development (EBRD) warned.

In addition to the recent G7 gradual import ban on Russian oil, Japan, which obtained 4% of its oil imports from Russia last year, has agreed to phase out Russian oil purchases. The timing and method have yet to be decided.

“The combination of Covid-related lockdowns in China and worldwide interest rate increases to battle inflation put equity investors on the back foot, strengthened the dollar and significantly raised concerns of economic slowdown,” said Tamas Varga of oil broker PVM.

Published in The Express Tribune, May 11th, 2022.

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