Most Asian and European markets fell Thursday as a rally in oil ramped up inflation fears, with top officials warning of more pain to come as the Ukraine war continues to push prices up and put further pressure on the global economy. Buyers on Wall Street were in retreat again after data showed US crude and gasoline stockpiles sank, just as the summer driving season begins and a leading OPEC member warned demand would surge further as China reopens. Adding to the gloom was the OECD’s sharp downward revision of its global growth outlook and doubling of its inflation forecast. The glum mood was only slightly offset by ongoing optimism that Beijing’s tech crackdown was close to an end. Both main crude contracts edged down but held most gains after jumping more than 2pc Wednesday to three-month highs after figures showed the biggest US storage depot had seen a big fall in reserves last week, suggesting elevated prices were not deterring people from driving. Meanwhile, White House Press Secretary Karine Jean-Pierre said officials expect Friday’s keenly awaited consumer price index will be “elevated”. The comment lifted expectations that the Federal Reserve will stick to its hawkish path and hike interest rates by half a point for at least three more meetings this year as it tries to bring down inflation from four-decade highs. Analysts said investors were unlikely to get any reprieve until crude — a key driver of inflation since Russia’s invasion of Ukraine — was brought under control. “A pullback in crude would be crucial for any prolonged risk rally, given implications for inflation expectations,” said SPI Asset Management’s Stephen Innes. “And for the central bank fraternity intent on frontloading rates, chapter two of the current playbook reads that aggressive tightening risks a material decline in housing, consumer confidence, and consumption that will eventually drive their respective economies into recession and send stocks tumbling. “So, until we reach peak inflation, which will trigger a less hawkish Fed and lower recession odds, it could be a gloomy summer for global stock pickers.” He added that prices were expected to rise further for now as China emerges from months of lockdown, a sentiment that United Arab Emirates Energy Minister Suhail Al-Mazrouei agreed with. “With the pace of consumption we have, we are nowhere near the peak because China is not back yet,” he told a conference Wednesday. “China will come with more consumption.” And OANDA’s Jeffrey Halley said difficulties monitoring Iran’s nuclear compliance meant a nuclear deal with Iran — and the release of its crude onto world markets — was “as far away as ever”. The unease about rising prices and rates saw all three main indexes fall on Wall Street, with focus on the European Central Bank’s policy meeting later Thursday and the release of US inflation data Friday. The ECB is expected to begin winding down its massive bond-buying programme and signal a rate hike is in the pipeline. Asian traders followed suit Thursday. Hong Kong dropped, even as tech firms continued to benefit from hopes that China’s crackdown was almost over, while Shanghai, Sydney, Seoul, Singapore, Taipei, Manila and Wellington were also in the red. Traders were nervous about news that officials in Shanghai will lock down a district of 2.7m people Saturday to conduct mass coronavirus testing, highlighting the problems they have in running an economy while chasing their zero-Covid strategy. There was little reaction to news that China’s exports surged last month. Tokyo, however, was marginally in positive territory as the yen sat at two-decade lows owing to widening monetary policies of the United States and Japan, which shows no signs of lifting rates. Mumbai, Jakarta and Bangkok also edged up. London, Paris and Frankfurt opened lower. Investors were jarred by a report from the Organisation for Economic Co-operation and Development, which said it had cut its 2022 growth outlook to 3pc — from 4.5pc predicted in December — owing to the Ukraine war. It also doubled its inflation estimate to 8.5pc, a 34-year high. “The world is set to pay a hefty price for Russia’s war against Ukraine,” wrote the OECD’s chief economist and deputy secretary-general Laurence Boone. And Anna Han, at Wells Fargo Securities, told Bloomberg Television: “Our view is that the chance of recession by the end of 2023 is 40pc or so.”