Oil prices plunge as global growth and US recession warnings keep piling up

• Crude oil prices fell more than 5% Tuesday as economic warnings piled up.
• The IMF slashed its forecast for global economic growth to 3.6% for 2022 and 2023.

Crude oil prices sank more than 5% Tuesday as new warnings about global growth and the US economy cropped up.

The IMF said Tuesday it was pulling back its global economic growth projections to 3.6% for the remainder of 2022 and 2023, down from its January projections for growth of 4.4% and 3.8%, respectively. The IMF said the war in Ukraine will worsen inflation and slow growth because the global economy still has yet to fully recover from the pandemic-induced economic downturn.

That downgrade followed a similar one on Monday from the World Bank, which lowered its 2022 growth view to 3.2% from 4.1%.

In midday trading, US crude oil prices were down 5.3% at $102.50 a barrel, and Brent crude dropped 5.1% to $107.38.

Meanwhile, views of the US economy are worsening as well. Fannie Mae said Tuesday it expects a recession in the second half of 2022. The mortgage giant warned the hawkish posture from the Federal Reserve has pushed interest rates higher, and that a recession is the most likely scenario as the Fed tries to tamp down inflation.

Fannie also said it expects the recession to unfold via the housing market, where it is now forecasting a 7.4% decline in activity in 2022 — worse than a prior view for a 4.1% drop. Fannie expects the decline to deepen in 2023, when it projects a 9.7% downturn.

On Monday, Goldman Sachs put the odds of a US recession at roughly 15% in the next 12 months and 35% within the next 24 months, saying 11 out of 14 Fed tightening cycles since World War II were followed by a recession within two years.