Oil down as interest rate hike cues fuel demand fears

Oil prices came under pressure due to concerns over an economic slowdown as central banks are expected to make more aggressive interest rate hikes. (Pixabay photo)

ANKARA – Oil prices decreased on Tuesday as signs of more aggressive interest rate hikes by central banks fuel recession and demand fears.

International benchmark Brent crude traded at $102.59 per barrel at 09:26 a.m. local time (0626 GMT) for a 0.33 percent decline from the closing price of $102.93 a barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) was at $96.91 per barrel at the same time for a 0.10 percent fall after the previous session closed at $97.01 a barrel.

Oil prices came under pressure due to concerns over an economic slowdown as central banks are expected to make more aggressive interest rate hikes.

The head of the US Federal Reserve, Jerome Powell, said Friday that the Fed deliberately moved its policy stance to a level that would be restrictive enough to reduce inflation to 2 percent.

He also acknowledged the rate hike at the July meeting was the second 75 basis point increase and an unusually large increase might be more appropriate at the next meeting.

“Our decision at the September meeting will depend on the aggregate of incoming data and the evolving outlook,” Powell said.

Meanwhile, the recent unrest in OPEC’s second-largest oil producer, Iraq, fueled supply fears and limited the downward pressure on prices.

At least 13 protesters were killed Monday after supporters of Iraqi Shia cleric Muqtada al-Sadr stormed the Republican Palace, the seat of the Iraqi government in Baghdad, according to local media.

More than 350 protesters were also injured in the unrest.

Authorities urged Iraqis to abide by a nationwide curfew and instructions from the security apparatus. The situation deteriorated in Baghdad earlier Monday after al-Sadr said he was quitting politics for good.

The Republican Palace is in the heavily fortified Green Zone, which houses government agencies and several foreign diplomatic missions.

Iraqi parties have been unable to form a new government since the last elections on Oct. 10, 2021.

The markets eye on the oil stock forecasts to be announced by the American Petroleum Institute later Tuesday, and the official oil stock data to be announced by the US Energy Information Administration Wednesday. (Anadolu)