Escalating tensions in the oil-rich Middle East as well as trouble with crude production in the African state of Libya, however, trimmed losses on the crude market as trading progressed.
The rebound came amid reports that Libya's biggest oil field, Sharara, had fully halted output after protesters shut down the site.
Israel, meanwhile, is bracing for attacks from Iran, Palestine, and Lebanese militant factions after the killings of Hamas leader Ismail Haniyeh and Hezbollah commander Fuad Shukr last week.
US West Texas Intermediate (WTI) crude settled Monday’s trade at $72.94 per barrel, down 58 cents, or 0.8%, on the day. Earlier, WTI tumbled to $71.69, its lowest since the week of February 2, when it plumbed $71.41.
UK-origin Brent crude settled the New York trading session at $76.30 per barrel, down 51 cents, or 0.7%. Brent’s session low was $75.06, a bottom not seen since the week of December 29, when it fell to $74.79.
“The hoped-for soft [US] economic landing is starting to look less likely,” Phil Flynn, an analyst at Chicago’s Price Futures Group, said in an email to the brokerage’s oil market clients.
Worries of a US recession have grown since July, when the Labor Department reported that non-farm payrolls grew by just 114,000, the smallest since the jobs boom that began after the pandemic. Unemployment, meanwhile, rose to 4.3%, the highest since December 2021. The softer labor market picture has weighed on crude prices as it has on stocks and other risk assets.
At the same time, the possibility of an enlarged war in the Middle East was “getting real,” with Iran threatening to retaliate for Haniyeh’s death and Israel “suggesting to Iran to go ahead and make their day,” Flynn said. This, he noted, had limited losses on the oil market.