Oil prices dropped sharply across both major benchmarks, as weak manufacturing data from China and Europe weighed down demand.
Brent Crude futures dipped below the $100 milestone, dropping 3.91 per cent to $99.90 per barrel, while WTI Crude tumbled 5.01 per cent to $93.68.
Factories across Asia and Europe struggled last month, as flagging global demand and China’s strict COVID-19 restrictions slowed production, surveys showed on Monday, adding to concerns about economies sliding into recession.
S&P Global’s final manufacturing Purchasing Managers’ Index (PMI) for the euro zone fell to 49.8 in July from June’s 52.1, plummeting below the 50 mark separating growth from contraction for the first time since June 2020.
The Caixin/Markit PMI also eased to 50.4 in July from 51.7 the previous month, sharply below analyst expectations.
Meanwhile, investors are braced for this week’s meeting of officials from OPEC+ about whether to further boost supplies.
The cartel agreed modest hikes in production at the last meeting, however it has persistently failed to reach output targets this year amid production difficulties.
Craig Erlam, senior market analyst at OANDA, said: “With the previous agreement having expired as the group has theoretically unwound all of the pandemic production cuts, attention will now shift to how OPEC+ plans to actually hit those targets and whether any further increases will be announced going forward.”
He argued Saudi Arabia was the most viable candidate to boost production, however Western calls for more supplies have fallen on deaf ears this year.
The analyst concluded: “Not many have the capacity to do that but some potentially do and President Biden will be hoping his Middle East trip will have helped secure some form of boost – or at least appear that way – that could prove important heading into the midterms in a few months.”
US President Joe Biden visited Saudi Arabia last month, however no announcements have since be made to boost production.
This is despite continued pressure from the White House, with Biden eager to drive down energy bills and the cost of living ahead of key mid-terms in November.