Oil prices fall amid inflation concerns and expected to raise US interest rates
Date
5/21/2024 4:01:24 AM
(MENAFN) Oil prices experienced slight declines during early Asian trading on Tuesday as investors anticipated that rising inflation and ongoing interest rate hikes in the United States would suppress consumer and industrial demand. By 0041 GMT, brent crude futures had dropped by 12 cents, or 0.1 percent, to USD83.34 per barrel, while U.S. West Texas Intermediate (WTI) crude fell by eight cents, or 0.1 percent, to USD79.72 a barrel. This followed a less than one percent decline in both benchmarks on Monday, influenced by remarks from U.S. Federal Reserve officials.
Fed Vice Chairman Philip Jefferson stated on Monday that it was premature to determine whether the slowdown in inflation was sustainable, while Michael Barr, Fed Vice Chairman for Oversight, emphasized that the restrictive monetary policy needed more time. Additionally, Atlanta Fed President Raphael Bostic noted that it would take time for the central bank to be assured of a sustained reduction in price growth. Lower interest rates typically reduce borrowing costs, potentially freeing up funds that could spur economic growth and increase demand for crude oil.
Meanwhile, the oil market showed little reaction to the political uncertainty in Iran following the death of President Ebrahim Raisi in a helicopter crash. Analysts predict that Iran's oil policy will remain unaffected by Raisi's sudden death, as Supreme Leader Ayatollah Ali Khamenei holds ultimate authority and has the final say on all state matters.
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