Oil prices fell by more than 4% at the end of trading today, Tuesday, to their lowest level in 3 months, after the inflation report in the United States and the recent collapse of two US banks raised fears of a new financial crisis that may reduce demand for oil in the future.
Brent crude futures fell $3.32, or 4.1%, to settle at $77.45 a barrel, while US West Texas Intermediate crude fell $3.47, or 4.6%, to settle at $71.33, according to Reuters.
Reuters indicated that this was the lowest closing level for both benchmarks since December 9, and the largest one-day percentage drop since early January.
The collapse of Silicon Valley and then Signature Bank pushed down bank stocks as investors worried about the financial health of some banks.
The US central bank is expected to raise the benchmark interest rate by just a quarter of a percentage point next week, down from the previously expected 50 basis points, and to make another increase of the same size in May. The next meeting of the bank begins next Tuesday and lasts for two days.
The US Central Bank is resorting to raising interest rates in order to curb inflation. But these higher rates increase consumer borrowing costs, which could slow the economy and reduce demand for oil.
