On Demand Fear, Oil Drops Below $85 For The First Time Since January

Despite the possibility of a disruption in Russian supplies, oil prices dropped to their lowest point since January as a result of a strengthening dollar and worries about global demand, reported Bloomberg.

West Texas Intermediate, the US benchmark, dropped below $85 while Brent, the global benchmark, dropped below $90. A dollar gauge reached an all-time high on Wednesday, offering a macro headwind at a time when the oil market is grappling with potential slowing demand in China.

With central banks jacking up rates to quell inflation, investors are concerned economies may be tipped into recession. Strict virus controls in China are reducing demand, and key cities from Chengdu to Shenzhen have extended lockdowns or implemented movement restrictions.

The Organization of Petroleum Exporting Countries and its allies' decision to reduce output on Monday caused prices to reverse a gain. Reflecting the downturn, Saudi Arabia lowered pricing for customers in Asia and Europe for next month's supplies.