Oil rates dip more than 1 percent amid American recession worries

(MENAFN) Oil prices experienced a decline on Monday, extending losses as worries over a potential United States recession overshadowed concerns about supply disruptions in the Middle East. Brent crude, which serves as the global benchmark for oil, fell by 1.81 percent to USD75.42 per barrel as of 1:55 PM UAE time. Similarly, West Texas Intermediate (WTI), a key indicator for United States crude oil, dropped 2 percent to USD72.05 per barrel.

This decline follows a significant drop in oil prices last Friday, when Brent settled 3.4 percent lower at USD76.81 per barrel, and WTI closed down 3.66 percent at USD73.52 per barrel. The slump in oil prices is part of a broader trend, with global stock markets also falling amid increasing fears of an economic downturn in the United States.

The US Labor Department's latest report has intensified these concerns. The report revealed that the United States economy added only 114,000 jobs in the previous month, a decrease from 179,000 in June and well below the anticipated 185,000. Additionally, the unemployment rate rose unexpectedly to 4.3 percent, the highest level since October 2021.

Despite these fears, some analysts suggest that the concerns about a recession may be exaggerated. They point to strong domestic oil demand in the United States as a counterbalance. Giovanni Staunovo, a strategist at UBS, noted that "oil, like other asset classes, is not immune to market shifts where investors seek safe haven assets." He explained that the recent sell-off in oil markets was exacerbated by investors who initially bought oil as a hedge against geopolitical tensions but then sold off their positions in response to negative momentum.

As market participants adjust their strategies in response to evolving economic signals, the oil market remains volatile, reflecting broader uncertainties in the global economy.

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