Oil Prices Drop 5% amid IMF Bearish Outlook

Oil prices fell about 5% in volatile trading on Tuesday amid concerns about demand after the International Monetary Fund (IMF) cut its economic growth forecast and warned of rising inflation.

Brent crude fell 5.225 to settle at $107.25 a barrel, while US West Texas Intermediate (WTI) fell 5.22% to settle at $102.56 a barrel.

Prices fell despite the decline in production of OPEC +, which produced 1.45 million barrels per day below its targets in March, as Russian production began to decline after sanctions imposed by the western allies over the invasion of Ukraine, according to Reuters.

The IMF cut its forecast for global economic growth by nearly 1%, citing the Russian invasion, and said inflation was now a "clear and present risk" for many countries.

Phil Flynn, an analyst at Price Futures Group said the IMF's lower growth forecast, along with the Strategic Petroleum Reserves' report of a 4.7 million barrel drop in emergency stocks on Monday "is causing some tension."

China's economy slowed in March, denting expectations already weakened by COVID-19 restrictions and the conflict in Ukraine.

Demand for fuel in China, the world's largest oil importer, could begin to rise as manufacturing plants prepare to reopen in Shanghai.

Tuesday's price drop followed a more than 1% rise on Monday, when oil prices hit their highest levels since March 28 due to disruptions in Libyan oil supplies.

Libya's National Oil Corporation on Monday warned of a "painful wave of closure" and announced force majeure on some production and exports as forces in the east expanded their blockade of the sector due to a political crisis.