Oil slumped on Wednesday, as it is under pressure from the sluggish economic growth in China, but supply fears spiked as flare-up disruptions in the Middle East raised the possibility of a monthly gain not seen since last September.

Brent crude slumped fell by 1.1% to $82 per barrel, while US WTI dipped 1.1% to $77 per barrel.

January saw a shrink for the fourth consecutive month in the manufacturing activity in China.

Following a court's ruling to liquidate troubled property giant China Evergrande, there was another indication that the nation's economy was having difficulty regaining momentum. A quarter of China's GDP is derived from the real estate sector.

Leading analysts and OPEC as well predict that China's consumption will be the main driver of the increase in oil demand in 2024.

Meanwhile, the US and militants affiliated with Iran, the Houthi group, are engaged in a naval battle in the Red Sea as part of the Israel-Hamas conflict.