Oil tumbled, shaken by the biggest U.S. bank collapse since 2008 as investors fled from risk assets and sought shelter in government bonds and gold. 

The failure of Silicon Valley Bank roiled markets as traders try to assess how the collapse will reverberate across the economy. Global benchmark Brent Crude fell below $80 for the first time in more than a month amid the turbulence before paring losses. The events were a reminder of how sensitive crude is to wider crosswinds. 

“Uncertainty across risk assets has increased meaningfully and crude remains highly sensitive to changes in risk appetite,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “The China recovery remains the upcoming catalyst but can’t buffer crude from short-term macro headwinds.”

U.S. authorities are rushing to strengthen confidence in the banking system and prevent contagion, while Goldman Sachs Group Inc. scrapped its call for a Federal Reserve interest-rate hike next week due to the turmoil. Oil and equity markets trimmed losses as some traders perceived a potential end to rate hikes as a result of the collapse. 

Oil has been whipsawed this year by concerns over America’s tightening monetary policy and optimism around China’s economic recovery. Many market watchers are still bullish on the longer-term outlook, with Saudi Aramco forecasting consumption will probably hit a record of 102 million barrels a day by the end of 2023.