Oil fell sharply on Wednesday morning, after slumping in the previous session, weighed down by concerns about weak demand due to the state of the global economy and China’s rising COVID cases.
Brent futures last fell $2.93 to $79.17 U.S. a barrel, a 3.57% loss. U.S. crude dropped $2.72, or 3.54%, to $74.21 U.S. per barrel.
Both benchmarks plunged more than 4% on Tuesday, with Brent suffering its biggest one-day loss in more than three months.
The Chinese government also increased export quotas for refined oil products in the first batch for 2023, signaling expectations of poor domestic demand.
Saudi Arabia, one of the world's top exporters, may further cut the prices for its flagship Arab Light crude grade to Asia in February, after they were set at a 10-month low for this month, as concerns of oversupply continued to cloud the market.
The head of the International Monetary Fund warned that much of the global economy would see a tough year in 2023 as the main engines of global growth - the United States, Europe and China - were all experience weakening activity.
The U.S. Federal Reserve also raised interest rates by 50 basis points (bps) in December after four consecutive increases of 75 bps each. If the Fed intensifies its rate hikes, that could slow the economy and hamper fuel consumption.
Lending oil some support, the dollar weakened on Wednesday after posting big gains in the previous session. A weaker dollar typically boosts demand for oil as dollar-denominated commodities become cheaper for holders of other currencies.
