Washington [US], July 6 (ANI): World oil prices plummeted on Wednesday (local time) and dropped below USD 100 a barrel for the first time since early May.

The price of West Texas Intermediate (WTI) crude tumbled as much as 10 per cent Tuesday, to hit a low of USD 97.43 before closing at USD 99.50, down 8 per cent on the day, reported CNN.

The slump reflects investors' growing concerns about a US recession that could crimp demand for oil.

It's the first time that WTI has been below USD 100 since May 11. That was also the last time Brent, which typically trades a bit higher, was below USD 102 a barrel. Brent has not been below USD 100 since April 25, reported CNN.

Wholesale gas futures fell as well, down almost 10 per cent for the day at the close, or 36 cents a gallon.

The national average cost of a gallon of gas at the pump is now USD 4.80, according to the latest AAA reading, down one penny from Monday and 8 cents from a week ago. Gas prices crossed the USD 5 mark for the first time on June 11 and hit a peak of USD 5.02 a gallon on June 14.

Rising fears about the chances of a recession are the primary driver of the latest sell-off in oil and gasoline futures, said Tom Kloza, global head of energy analysis for OPIS.

Until fairly recently, oil and gasoline investors had believed that there was little in the way of market forces to keep prices in check in the near term, reported CNN.

There have been mounting fears of a recession in recent weeks, which has sharply lowered oil prices. Brent was at USD 123.58 a barrel on June 8, while WTI was at USD 122.11.

But since that peak, the Consumer Price Index showed consumer prices hit a 40-year high, one of the key metrics that prompted the Federal Reserve to hike interest rates by three-quarters of a percentage point as a way of combating those price pressures.

That has raised expectations that the central bank's aggressive moves to cool the economy could cause job losses and a recession, reported CNN.

Oil and gas prices surged earlier this year after the Russia-Ukraine war prompted the United States and its European allies to sanction Russian energy exports, effectively choking off one of the world's largest producers.

The previous time gas hit a record high was during the Great Recession, when the national average reached USD 4.11 a gallon in July 2008.

US gasoline retailers have little incentive to cut prices more deeply with strong demand for gasoline with the summer driving season in full swing, reported CNN.

There could be more price drops at the pump in the near term -- a decline of another 10 cents a gallon in the next week or so wouldn't be a surprise, Kloza said.

Station owners who are paying less for wholesale gas will be watching to how much of the savings their competitors are passing on to customers before they set their own prices.

There likely won't be any big declines until schools reopen and the summer driving season ends this fall, he predicted.

There are also risks that further developments in Russian oil exports tied to the war in Ukraine or hurricanes hitting US oil infrastructure along the Gulf Coast could send prices climbing up rapidly once again. (ANI)