Oil prices edge down as economic headwinds ease ME supply fears
HOUSTON — Oil prices settled marginally lower on Tuesday after economic headwinds pressured investor sentiment, curbing gains from geopolitical tensions with eyes on Israel and its pending response to Iran’s attack on Israeli territory over the weekend.
Brent crude futures for June delivery settled eight cents lower, or 0.1% at $90.02 a barrel. US crude for May delivery fell five cents lower, or 0.1%, to end at $85.36.
The run of disappointing data showing stronger-than-expected inflation means the US Federal Reserve will likely need more time than previously thought to be confident that inflation is on the path to 2%, Fed Chair Jerome Powell said.
“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Mr. Powell said during an event held at The Wilson Center in Washington.
“Rising interest rates are killing markets, as it appears the Fed is stuck in the mud, while the economy continues to inflate,” said Tim Snyder, economist at Matador Economics.
On the supply side, Brent reached $92.18 on Friday, its highest level since October on concerns that Iran would respond to Israel’s April 1 strike on its embassy compound in Damascus. But prices retreated on Monday after the Iranian counterattack on Israel over the weekend proved less damaging than anticipated.
“So far, markets appear rather sanguine to the rising tensions, and cautiously optimistic that Israel’s response will be restrained, and that an all-out war will be sidestepped,” said Matthew Ryan, head of market strategy at global financial services firm Ebury.
US Treasury Secretary Janet Yellen said the US intends to hit Iran with new sanctions in coming days due to its unprecedented attack on Israel, and that these actions could seek to reduce Iran’s capacity to export oil.
Israel’s war cabinet was set to meet for the third time in three days on Tuesday, an official said, to decide on a response to Iran’s attack, amid international pressure to avoid further escalating the conflict in the Middle East (ME).
This third meeting, however, has now been postponed until Wednesday, as Western allies eyed swift new sanctions against Tehran to help dissuade Israel from a major escalation.
Iran produces more than three million barrels per day of crude oil as a major producer within the OPEC. Iran will respond to any action against its interests, President Ebrahim Raisi was reported as saying by the Iranian Student News Agency a day after Israel warned it will respond to Tehran’s drone and missile attack. —