Oil prices continued their decline on Monday morning, with both Brent and WTI hitting their lowest levels since January. This drop began on Friday, spurred by new U.S. recession fears following a weak July payrolls report.
Long-standing demand concerns from China have already been weighing on oil prices. Now, fears of a U.S. recession are adding more downward pressure. These economic worries in the U.S. have had a global impact. Asian stocks have tumbled, and the Nikkei has posted its largest-ever decline, surpassing the crash in October 1987 after Black Monday in New York.
Despite demand concerns driving market sentiment, geopolitical risks remain significant. Israel is bracing for a potential retaliatory attack from Iran, prompting the U.S. to send defensive reinforcements to the region. The U.S. embassy in Lebanon has advised citizens to leave the country as soon as possible, further underscoring the risk of escalation.
At the time of writing, WTI had fallen by over 2.38% to $71.77, and Brent had dropped by 2.08% to $75.21. The oil markets are poised for another week of high volatility as demand concerns intersect with rising geopolitical risks.