Oil prices fell in European trade on Friday with US crude hitting eight-month lows, while Brent plumbed two-week lows, on track for the fourth weekly loss in a row, as US treasury yields surge while investors shun high-risk assets.
Prices are also pressured by concerns about global recession and its impact on fuel demand after a string of interest rate hikes by global central banks.
Global Prices
US crude fell 3.8% to $80.38 a barrel, the lowest since January, while Brent shed 3.3% to $87.46 a barrel, the lowest in two weeks.
US crude climbed 0.6% on Thursday, while Brent added 0.3%, the first profit in four days as the dollar stalls.
Oil prices remain down 5.1% so far this week on track for the fourth weekly loss in a row.
US Yields
US 10-year treasury yields rose 3.1% on Friday for the second session, hitting 12-year highs at 3.829%, hurting risk appetite in the market.
Such developments came after the highly bullish Federal Reserve's meeting as it seeks to control record inflation in the US.
As expected the Federal Reserve hiked interest rates by 75 basis points for the third meeting in a row to 3.25%, the highest since 2008.
The Fed intends to maintain its bullish stance against inflation, raising rates to 4.5% by the end of the year, which means we have 125 basis points of rate hikes in the last two meetings of the yer.
Global Recession
Global Central Banks continue to tighten their monetary policies and increase interest rates by steeper amounts to control double-digit inflation.
Such aggressive policy tightening could very well lead to a global recession and weaker demand on fuel.
And indeed, weaker manufacturing and services sectors in China are already impacting oil demand, with periodic Covid 19 breakouts making the situation more precarious.