Oil prices on international markets fell below $86 as the US is getting ready to release inflation data, which could encourage the central bank to raise interest rates more aggressively, dampening demand.
In morning trading, Brent oil prices are slightly above $86, while WTI oil is currently trading at $79.37 per barrel, according to data published on oilprice.com.
Russia’s announcement last Friday, that it would cut production by 500,000 barrels per day in March, worried traders. Moscow had to do this due to the Group of Seven (G7) and its allies, including the European Union (EU) ‘s price cap on Russian oil and oil derivatives. The group imposed these sanction to limit revenues of Moscow for financing the war in Ukraine.
At the beginning of the week, the focus shifted to the US inflation report for January, which is expected to be released later in the day. The US central bank is raising interest rates to curb inflation, which traders fear will slow down the economy and demand for oil.
Edward Moya from the company OANDA said crude oil prices were falling as energy traders estimated the outlook for oil demand could worsen as a key inflation report could force the US central bank to tighten monetary policy further.
Supply tensions
Concerns about demand coincided with signs of easing supply tensions after a shipment of Azerbaijani oil left the Turkish port of Ceyhan on Monday, the first since the devastating earthquake that devastated Turkey and Syria.
Cheyhan is a storage and loading point for oil that arrives via gas pipelines from Azerbaijan and Iraq.
The Organization of the Petroleum Exporting Countries (OPEC) announced separately that on Friday, the price of a barrel of the oil basket of its members cost $83.56.
