Oil prices plunged more than five percent Wednesday as traders grow increasingly worried that demand for the commodity will take a hit from a possible recession caused by a sharp hike in interest rates aimed at reining in inflation.

West Texas Intermediate lost 5.6 percent to $103.31 a barrel, while Brent was off 5.2 percent at $108.62.

Crude has soared in recent months to multi-year highs on concerns that tight supplies caused by the Ukraine war will not be enough to meet demand from reopening world economies, particularly China as it emerges from months-long lockdowns.

But central banks have been forced to ramp up borrowing costs as the rise in energy costs has helped send inflation soaring to levels not seen since the 1980s. That has fanned concerns that economies around the world are heading for a recession, sending chills through crude markets.

Eyes are on a two-day Congressional testimony by Federal Reserve boss Jerome Powell this week, which will be looked over for an idea about officials' plans for fighting runaway prices.

However, Goldman Sachs said it still sees prices for the black gold to resume their upward march.

"With commodity demand above supply, markets remain tight even as growth rates slow," it said in a note.

"Investors should remember that Fed-induced slowdowns are simply a short-term abatement of the symptom, inflation, and not a cure for the problem, underinvestment."