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HOUSTON: Oil prices fell more than $7 a barrel on Tuesday, the steepest decline in about a month, on fears that an inflation-induced weakening of global economies would soften fuel demand and as unrest in Iraq has failed to put a dent in the OPEC nation’s crude exports.
Brent crude futures for October settlement were down $7.12, or 6.8 percent, at $97.97 a barrel by 12:20 p.m. EDT (1620 GMT) after touching a session low of $97.91 a barrel.
The October contract expires on Wednesday and the more active November contract was at $97.10, down 5.7 percent.
US West Texas Intermediate crude dropped by $6.10, or 6.3 percent, to $90.93.
Inflation is near double-digit territory in many of the world’s biggest economies. This could prompt central banks in the US and Europe to resort to more aggressive interest rate increases, which could slow economic growth and weigh on fuel demand.
Prices tumbled after comments from Iraq’s state-owned marketer SOMO that the country’s oil exports are unaffected by unrest, said UBS analyst Giovanni Staunovo.
Baghdad’s worst fighting in years between different political groups continued for a second day.
Still, SOMO said it can redirect more oil to Europe if required.
Prices felt more pressure when Russia’s fastest-growing oil producer, Gazprom Neft, said it plans to double oil production at its Zhagrin field in Western Siberia to more than 110,000 barrels per day.
Investors will watch the meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, known collectively as OPEC+, on Sept. 5.
Saudi Arabia last week raised the possibility of production cuts from OPEC+, which sources said could coincide with a boost in supply from Iran should it clinch a nuclear deal with the West.
With most producers already operating at or above capacity and growing signs that the global economy may be slowing, some reduction of supply is looking increasingly likely in the coming months, said Matt Weller, head of research at FOREX.com and City Index.