Oil prices closed sharply lower on Tuesday, to their lowest level in four months, while the market worries about a possible recession after tightening monetary policy that resulted in the first turmoil in the US banking sector.

The price of a barrel of Brent crude from the North Sea for May delivery fell 4.11%, to close at $77.45. The price of a barrel of US West Texas Intermediate oil, due in April, decreased by 4.63% to $71.33.

In after-hours electronic trading, the market's two oil benchmarks continued to decline, with Brent dropping below $77 and WTI below $71 for the first time since early December.

"This banking crisis is reinforcing the fear of a recession," commented John Kilduff of Again Capital, referring to the bankruptcy of three US institutions in the space of a few days.

Despite some stability on Wall Street on Tuesday and the emergency measures taken by the US authorities on Sunday to guarantee deposits, he said that what happened "affects investor confidence" in the financial system and "in the economy in general ... This does not bode well for the demand for oil." .

"Other than gold, the entire commodities sector seems to think we're heading into a recession," said Bill O'Grady of Confluence Investments.

"Most conventional indicators say so," he added, noting in particular the evolution of bond prices, which are higher in the short term than in the long term in several months, a phenomenon that almost systematically predates a recession.

Bill O'Grady believed that the market had so far been holding on to the possibility of a rebound in Chinese demand, to the extent of underestimating short-term fundamentals, namely ample supply and weak US or even European consumption of refined products.

This has led to an increase in prices since the beginning of the year, within narrow margins.

"It looks like we've broken out" of that range, he said, and "when we cross a technical threshold (with a downward trend), that often leads to additional selling" and accelerates the drop, which is what happened at the end of the session on Tuesday.

Analyst Helima Croft at RBC pointed to the possibility of intervention by the Organization of the Petroleum Exporting Countries (OPEC) if prices continue to decline.

But the organization updated its forecast for 2023 on Tuesday and maintained its estimate for an increase in demand of 2.3 million barrels per day.