Oil prices plunge on concerns over debt default, rate hikes

NEW YORK, May 2 (Xinhua) -- Crude oil futures prices tanked over 5 percent on Tuesday due to concerns over possible U.S. debt default and expected hikes of interest rates by the Federal Reserve and European Central Bank this week.

The West Texas Intermediate (WTI) for June delivery dropped 4 U.S. dollars, or 5.29 percent, to settle at 71.66 U.S. dollars a barrel on the New York Mercantile Exchange. Brent crude for July delivery shed 3.99 U.S. dollars, or 5.03 percent, to settle at 75.32 U.S. dollars a barrel on the London ICE Futures Exchange.

Oil markets plunged amid recession worries, while the U.S. banking crisis and U.S. Treasury Secretary Janet Yellen's remarks about a potential U.S. default put additional pressure on oil prices.

The United States could not be able to satisfy all of the government's obligations as early as June 1 if the U.S. Congress doesn't raise or suspend the debt limit before that time, warned Yellen on Monday.

Both the Federal Reserve and European Central Bank are expected to further raise benchmark interest rates this week, which would add downward pressures to major economies.

Iran's daily oil production exceeded 3 million barrels in the last 20 months, up from an average of 2.4 million barrels per day in 2021, according to a report by Reuters.

However, U.S. commercial crude oil inventory is expected to have a drop of 3.3 million barrels last week, according to a survey by the S&P Global Commodity Insights.