Oil prices slipped on Tuesday due to market trepidation ahead of the US Federal Reserve’s (Fed) interest rate decision on Wednesday.
International benchmark Brent crude traded at $83.21 per barrel at 9.39 a.m. local time (0639 GMT), down 1.02% from the closing price of $84.07 a barrel in the previous trading session.
At the same time, American benchmark West Texas Intermediate (WTI) traded at $76.63 per barrel, a 1% decrease after the previous session closed at $77.41 a barrel.
The upcoming rate hike decision by the US Fed adds to the market’s blurriness. While the Fed is widely expected to maintain its hawkish stance in order to successfully combat inflation, some European Central Bank (ECB) policymakers are signaling higher eurozone interest rates.
Expectations of higher interest rates also fueled the US dollar’s strength, discouraging oil-importing countries from purchasing dollar-indexed crude.
The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, rose 0.14% to 103.95 early Tuesday.
On the supply side, investors have been eyeing statements by the Organization of Petroleum Exporting Countries (OPEC) after Russia’s announcement of a 500,000-barrel cut in oil production in March.
Saudi Arabia’s Energy Minister Abdulaziz bin Salman said on Monday that decisions by OPEC are not ‘politicized’ and can be altered in line with market fundamentals.
Speaking at the Saudi Media Forum in the capital city of Riyadh, Salman added that the group is ‘sufficiently flexible to adjust policy as needed.’
The group was widely criticized for reducing the output by 2 million barrels per day while most western countries had been urging the group to add more barrels in the face of supply disruptions caused by the Russia-Ukraine war and sanctions on Russian oil and gas exports.
Saudi Arabia, however, has been insistently denying accusations that political motives were behind the output cut decision.
