https://arab.news/mj8v6
LONDON: Oil prices slipped on Thursday as persistent inflation dampened rate cut optimism but stayed near six-month highs as investors braced for a potential attack on Israeli interests by Iran.
Brent crude futures were down 20 cents or 0.2 percent to $90.28 a barrel at 3:20 p.m. Saudi time, while US West Texas Intermediate crude futures lost 30 cents or 0.3 percent to $85.91 a barrel.
“We think it will be difficult to maintain Brent above $90 in 2H24 without actual supply disruption associated with geopolitical events,” said global energy strategist Vikas Dwivedi of Macquarie.
“As a result, we expect oil to turn bearish as the year progresses due to non-OPEC supply growth, a material amount of OPEC+ spare capacity re-entering the market, and the potential that continuing inflation softens demand.”
Minutes from the US Federal Reserve showed officials worried that progress on inflation might have stalled and a longer period of tight monetary policy would be needed to tame inflation in the world’s largest economy.
Investors who had earlier expected a rate cut in June now see September as a likelier timing for the easing cycle to begin, following a third straight stronger-than-forecast reading on consumer inflation.
Higher-for-longer rates could dampen economic growth and suppress demand for oil.
Meanwhile the Middle East is on alert for possible Iranian retaliation for a suspected Israeli air strike on Iran’s embassy in Syria on April 1.
Earlier this week, Israel and Hamas began a fresh round of negotiations in their more than six-month-old Gaza war but those talks have yielded no agreement.
US Secretary of State Antony Blinken has told Israeli Defense Minister Yoav Gallant that Washington will stand with Israel against any threats by Iran, the US State Department said on Wednesday.
“Prices remain sensitive to geopolitical developments in the Middle East, with market participants pricing for the risks of supply disruptions if tensions were to drag for longer,” said Yeap Jun Rong, market strategist at IG.