Oil prices fell on Monday to their lowest in 15 months on concerns risks in the global banking sector may cause a recession that would lead fuel demand to decline and ahead of a potential hike in US interest rates this week.

Brent crude futures for May settlement fell $2.32, or 3.2 per cent, to $70.65 a barrel at 0710 GMT. The contract earlier declined to as low as $70.56, its lowest since December 2021.

Last week, Brent fell nearly 12 per cent, its biggest weekly fall since December.

US West Texas Intermediate crude for April delivery was at $64.59 a barrel, down $2.15, or 3.2 per cent. It earlier fell to $64.51, also its lowest since December 2021. The contract declined by 13 per cent last week, its biggest weekly drop since last April.

The April contract will expire on Tuesday and the more actively traded May futures was also down 3.2 per cent at $64.81 a barrel.

The slide in oil comes despite a historic deal which will see UBS, Switzerland’s largest bank, buying the country’s No. 2 lender Credit Suisse in an effort to stop a banking crisis from spreading.

Following the announcement, the US Federal Reserve, European Central Bank and other major central banks pledged to enhance market liquidity and support other banks.

“The market focus is on current banking sector volatility and the potential for further rate hikes by the Fed,” said Baden Moore, National Australia Bank’s head of commodity research.

“The upcoming OPEC meeting is another potential catalyst on the outlook for the market. Further downside risk to prices increases the probability OPEC reduces production further to support prices,” Moore added, referring to the Organization of the Petroleum Exporting Countries.

The US Federal Reserve is expected to raise interest rates by 25 basis points on March 22 despite the recent banking sector turmoil, according to most of the economists polled by Reuters.

However, some executives are calling on the central bank to pause its monetary policy tightening for now but be ready to resume raising rates later. A slowdown in interest rate hikes could depress the greenback, making dollar-denominated commodities like crude oil more affordable for holders of other currencies.

“Volatility is likely to linger this week, with broader financial market concerns likely to remain at the forefront. In addition, we have the FOMC meeting this week, which adds further uncertainty to markets,” said ING Bank in a note, referring to the US Federal Open Market Committee.

“While we still expect the market to trend higher over the course of the year, $100 per barrel plus Brent is less likely.”

A ministerial committee of OPEC and producer allies including Russia, known as OPEC+, is set to meet on April 3, with a full ministerial meeting planned for June 4. The organization had agreed in October to cut oil production targets by 2 million barrels per day until the end of 2023.

Separately, Goldman Sachs cut its forecasts for Brent crude after prices plunged on banking and recession fears. The investment bank is now expecting Brent to average $94 a barrel in the next 12 months, and $97 in the second half of 2024, down from $100 previously.