Oil prices plunged by more than 5% today as investors worried about a drop in demand after the International Monetary Fund cut its global growth forecast.

By evening, the price of Brent crude, the main international oil contract, was down 5.4% to $107.11 per barrel, while the main US oil contract, WTI, fell 5.5% to $102.30.

European stocks were all down at close, as traders fretted over the IMF's pessimistic outlook for 2022.

The IMF sharply downgraded its 2022 global growth forecast to 3.6% in its latest outlook report Tuesday, 0.8 percentage points lower than its previous estimate in January.

Energy prices are surging, debt levels are rising and shortages remain acute, the IMF noted, as multiple crises including the Ukraine war and coronavirus pandemic fuel an acceleration of inflation.

"The economic effects of the war are spreading far and wide - like seismic waves that emanate from the epicenter of an earthquake," IMF chief economist Pierre-Olivier Gourinchas said in the report.

The downgrade was sharper for the eurozone, which is now expected to grow by 2.8% instead of 3.9%.

Michael Hewson, chief market analyst at CMC Markets UK, said Tuesday's "sharp decline in oil prices offsets concerns that the start of a renewed Russian offensive on the Donbass region (in the east) could increase the pressure on the EU to look at a complete embargo on Russian oil and gas".

Wall Street was up in late morning trading, with the three major indices reporting rises of more than one percent, a marked change from Monday when markets were lower over worries about higher interest rates.

Hewson noted that the IMF's cut to the US growth forecast, from 4% to 3.7%, was more modest than that to the eurozone.

Asian markets diverged as the region weighed the impact of Covid lockdowns in China, analysts at Charles Schwab investment firm said in a note.

China's economic growth accelerated in the first quarter of the year to 4.8%, official data showed Monday, but the government warned of "significant challenges" ahead.