Oil prices lowest since 2021 on banking fears

STORY: Oil prices dropped to their lowest levels in 15 months on Monday on concerns that a global banking crisis could spark a recession that would reduce fuel demand.

In volatile trading, global benchmark Brent crude and U.S. West Texas Intermediate crude each fell about $3 a barrel to their lowest levels since December of 2021.

WTI sunk below $65 a barrel before paring some losses. Brent was trading around $72 a barrel. Brent hit a 14-year peak of around $130 a year ago and was one of the main drivers of global inflation. It was above $100 a barrel as recently as July.

Crude’s Monday slide came despite a historic deal in which UBS, Switzerland's largest bank, agreed to buy Credit Suisse in an attempt to rescue the European country's second-biggest bank.

After the deal was announced, the U.S. Federal Reserve, European Central Bank and other major central banks pledged to enhance market liquidity and support other banks.

Given the recent turmoil in the banking sector and fears it could trigger a long-feared recession, traders and economists remain split on whether the Federal Reserve will raise its benchmark rate when policy makers meet this week.

Some executives are calling on the central bank to pause its monetary policy tightening for now but be ready to resume raising rates later.

Meanwhile, one oil analyst tells Reuters that the oil market is moving more on fear than fundamentals, saying (quote), "We're not moving at all on supply and demand fundamentals, we're just moving on the banking concerns."