U.S. dollar at over 20-year high against basket of currencies. Oil prices plunged about 5% to an eight-month low on Friday as the U.S. dollar hit its strongest level and on fears rising interest rates will tip major economies into recession, cutting demand for oil.
Brent futures were down $4.31, or 4.8%, to settle at $86.15 a barrel, down about 6% week-on-week. West Texas Intermediate (WTI) crude was down $4.75, or 5.7%, to settle at $78.74, down about 7% week on week.
Brent and WTI fell for the fourth week in a row. This was the fourth consecutive week of declines for both benchmarks, the first since December. Both are technically in oversold territory, with WTI closing at its lowest since Jan. 10 and Brent following its lowest close since Jan. 14.
U.S. gasoline and diesel futures also fell more than 5%.
The US Federal Reserve raised interest rates by 75 basis points on Wednesday. Central banks around the world have followed suit with their own hikes, raising the risk of an economic slowdown.
Global growth concerns hit panic mode due to the central banks’ sayings and commitments to fight inflation.
The US dollar is closing at its highest against a basket of other currencies since May 2002. A strong dollar reduces demand for oil by making fuel more expensive for buyers using other currencies.
Growing fears of the impending global recession are mounting as the dollar pushes down dollar-denominated commodities like oil and central banks raise interest rates.
A survey showing that the decline in business activity in the eurozone deepened in September showed a recession as consumers reined in spending and governments encouraged energy savings after Russia’s moves to cut European supplies.
Wall Street’s main indexes fell more than 2% on Friday as investors feared the Federal Reserve’s hawkish policies to suppress inflation could trigger a recession and hurt corporate earnings.
Russia launched referendums aimed at annexing the four occupied territories of Ukraine, raising the risks of war.
On the supply side, efforts to revive the 2015 Iran nuclear deal stalled after Tehran insists on closure of the U.N. nuclear watchdog’s investigations, which undermines expectations for a resurgence of Iranian crude oil exports.
