Oil Drops Under $114 Due to Disagreements

European Union foreign ministers are divided on whether to join the United States in banning Russian oil. Some countries, including Germany, say the bloc is too conditional on Russia’s fossil fuels to withstand such a step.

Brent crude fell $1.92, or 1.7%, to $113.70 a barrel at 0920 GMT. U.S. West Texas Intermediate crude slipped $2.82, or 2.5%, to $109.3. Both contracts had settled up more than 7% on Monday.

Oil also dropped as the U.S. dollar boosted after comments from U.S. Federal Reserve Chair Jerome Powell on Monday that flagged a more aggressive tightening of monetary policy than earlier anticipated. [USD/]

A strong dollar makes crude more pricey for other currency holders and considers on risk appetite.

According to Tamas Varga of broker PVM, the word ‘transitory’ regarding inflation is a distant memory, chiefly because of rising commodity prices. Central banks, conducted by the Federal Reserve, stand ready to increase the cost of borrowing significantly.

Saudi Energy and Water Drop

Brent hit $139 a barrel, the highest after 2008, earlier this month. Threats to supply from the war in Ukraine and attacks by Yemen’s Iran-aligned Houthi group on Saudi energy and water desalination facilities capped the downside.

Saudi Arabia said on Monday that it would not bear accountability for any global supply shortages after the attacks by the Houthis, in a sign of growing Saudi frustration with Washington’s handling of Yemen and Iran.

In principle, the latest round of U.S. inventory data will be later. Analysts expect no change in crude oil stocks. The American Petroleum Institute, an industry group, issues its supply report subsequently on Tuesday. [EIA/S]