Oil prices extended losses on Tuesday but European gas prices hit near six-month highs, in both cases fuelling fears of recession. Major stock markets mostly rose on bets that the Federal Reserve would not lift borrowing costs by 75 basis points for a third straight time next month after decades-high inflation eased in the United States.

However, “a slick of worry is growing about the darkening prospects for global growth as economies slow around the world, pushing down oil prices in expectation of lower demand”, noted Susannah Streeter, senior investment and markets analyst Hargreaves Lansdown. Both main crude contracts dropped, having lost about three percent Monday, as demand expectations decline in light of a string of soft economic indicators in major economies, notably China.

Analysts said Tehran could provide 2.5 million barrels a day, giving a much-needed shot in the arm to supplies, which have been hammered by sanctions on Russia in response to its invasion of Ukraine.

Libya has also boosted production, helping prices drop to six-month lows and wiping out the gains seen after the Ukraine war started. But analysts warned that there might still be some way to go on agreement, owing to upcoming US elections.

“Markets are currently prone to optimism, though, and hopes for a deal... have added to downward pressure on oil prices.”

The United States on Monday said it was informing EU foreign policy chief Josep Borrell of its response to the text he submitted on August 8.

In Europe Tuesday, the natural gas reference price Dutch TTF rallied 4.7 percent to 230.50 euros per megawatt hour -- the highest points since the start of March, or not long after Russia’s invasion of Ukraine.

Russian President Vladimir Putin on Tuesday accused Washington of drawing out the war, as explosions rocked a Russian military facility on the Kremlin-controlled peninsula of Crimea. Washington is “using the people of Ukraine as cannon fodder”, he said, lashing out at the United States for supplying weapons to Kyiv.

 Gold extended losses on Tuesday after posting its biggest drop in a month in the previous session as a stronger dollar dented bullion’s appeal, while investors watched for signs of further policy tightening by the U.S. Federal Reserve. Spot gold fell 0.2% to $1,776.22 per ounce by 1126 GMT, after falling more than 1% on Monday. U.S. gold futures dropped 0.4% to $1,790.60. The dollar, also considered a safe store of value along with bullion, benefited from a disappointing set of economic data out of China and a surprise rate cut by the country’s central bank. A stronger dollar makes gold more expensive for overseas buyers. “Amidst this uncertainty, investors are finding comfort in the safety of the dollar, in a dynamic that penalises gold due to the inverted price correlation between the two,” said Ricardo Evangelista, senior analyst at ActivTrades.

Agencies