Oil fell in choppy trading as global stocks continued to sell off on Monday, but was held back by fears of a wider Middle East war.
Brent crude futures fell 51 cents, or 0.66%, to $76.30 a barrel, having previously traded at their lowest levels since January. WTI crude fell 58 cents, or 0.79%, to $72.94.
Stocks fell from Asia to North America as investors fled riskier assets and feared the Fed would need to cut interest rates quickly to spur U.S. economic growth.
Worries about potential supply disruptions from a wider Middle East war capped losses.
There has been a serious escalation in the region after Iran and its allies Hamas and Hezbollah vowed to retaliate against Israel for the killing of Hamas leader Ismail Haniyeh and a senior Hezbollah military commander last week.
Oil traders said they hoped Iran’s response would be short-lived, making crude futures more vulnerable to fears of a U.S. recession that rocked markets on Monday.
If that passes quickly and crude prices join the gloomy fanfare, prices could spiral out of control.
The decline in diesel consumption in China, the largest contributor to world oil demand, is also weighing on oil.