The prices of West Texas Intermediate (WTI) crude oil plunged to the pre-war levels on the New York Mercantile Exchange (NYMEX) as fears about a possible recession and the expectations of a sharp hike in interest rates in the US dampened the demand for the commodity.

The most active September WTI crude oil contract on the NYMEX hit a five-month low of USD 88.23 per barrel, lower than the pre-Ukraine war price of USD 89.06 per barrel. High inflation in the US sparked fears that the US central bank may raise interest rates by as much as 100 basis points at its meeting later this month. Rising interest rates may diminish demand for crude oil as the rate of borrowing for the public also goes up.

The data released by the US Labor Department on Wednesday showed inflation in the US grew 9.1 percent on year in June, the steepest rise since November 1981. "Crude oil prices fell as investors weighed tight supplies against the prospect of a large US rate hike that could stem inflation and curb crude demand," said Tapan Patel, senior analyst at HDFC Securities. A rise in the US dollar index also limited the gains for crude oil contracts. A stronger dollar makes oil more expensive for holders of other currencies.

After the fall in global crude oil prices, there is a possibility of an unexpected tax review.

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