Oil eases at week’s open after major central banks’ rate warning

Oil eased earlier in the week after major central banks, including the Federal Reserve, announced higher interest rates for longer to stifle inflation, hurting the outlook for energy demand.

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(Bloomberg) – Oil eased earlier this week after major central banks, including the Federal Reserve, signaled higher interest rates for longer to stifle inflation, hurting demand prospects of energy.

West Texas Intermediate retreated below $93 a barrel after climbing 2.5% last week. Fed Chairman Jerome Powell warned of the « unfortunate cost » of tougher US policy, while a senior European Central Bank official said there was « little ‘other choice’ than to continue even if the European economy tipped into recession.

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Crude prices are on track for a third consecutive monthly decline in what would be the longest losing streak in more than two years. The decline wiped out any gains made after Russia invaded Ukraine even as new sanctions against Moscow are set to come into effect from the last quarter. To offset some of the weakness, Saudi Arabia said OPEC+ may cut production soon.

Oil traders were also following developments in the Middle East. In Libya, clashes between militias in the capital have left at least 23 people dead, raising concerns that further upheaval in the OPEC nation could jeopardize oil supplies.

Iran, meanwhile, said talks with the United States over a European Union proposal to revive a nuclear deal would extend into next month. If reached, a deal would pave the way for Tehran to increase crude shipments.

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