Oil price drops due to recession fear | Economy

US oil for August delivery dropped 2.1 percent to $103.93 a barrel. That is the lowest level in six weeks. Brent oil, from the North Sea, became 1.9 percent cheaper, to USD 109.60 per barrel. The commodity index also took a hit and is now at its lowest level since March.

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A recession would mean that demand falls. The US central bank has already hiked interest rates several times, but plans to raise interest rates even more to bring inflation to the target of 2 percent, Powell said on Wednesday. He admitted that these policies could potentially slow the economy and even cause a recession, although that is not the intention, he said. A soft landing is “a challenge” according to the Fed chairman.

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The US stock markets also closed with slight losses on Wednesday evening. A red opening is expected in Europe.

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