Oil prices fell Wednesday as easing US-Iran tensions and expectations of a 25-basis-point US Federal Reserve rate hike reduced supply and demand concerns, while disruptions to Saudi crude shipments limited the decline.
International benchmark Brent crude futures for November delivery traded at $107.46 a barrel at 10 a.m. local time (0700 GMT), down 1.3% from the previous close of $108.75.
US benchmark West Texas Intermediate (WTI) crude futures for October delivery decreaded 1.7% to $104.13 a barrel from $105.83.
US House of Representatives on Tuesday passed a war powers resolution directing President Donald Trump to withdraw US forces from the conflict with Iran.
House Foreign Affairs Committee Democratic member Gregory Meeks said the US had been involved in the conflict for nearly 200 days without achieving the Trump administration’s stated objectives.
He cited rising gasoline and mortgage costs, inflation, billions in government spending and US military casualties among the costs.
The House has now passed a similar resolution three times, fueling expectations of easing Washington-Tehran tensions and weighing on oil prices.
Expectations that the Fed will tighten monetary policy are also weighing on prices.
The Fed kept its policy rate unchanged at 3.50%-3.75% at its July meeting, while market expectations have increasingly pointed to a 25-basis-point rate hike in its decision due later in the day.
Although a potential Fed rate hike would not directly eliminate supply shortages, it is expected to weigh on prices by slowing economic activity and oil demand in the US, the world’s largest oil consumer.
– Russia-Ukraine ‘energy ceasefire’ efforts weigh on prices
Meanwhile, US President Trump’s efforts to halt attacks on energy infrastructure between Russia and Ukraine are easing concerns over global supply disruptions.
Trump said Monday that the two sides had agreed to stop targeting each other’s energy facilities, arguing that the Russia-Ukraine war, rather than Iran, was largely driving the rise in global diesel prices.
Zelenskyy, however, said Tuesday that Ukraine had struck an oil refinery and drone production facilities in Russia, while Russia continued to target Ukraine’s energy system and critical infrastructure.
Russian Foreign Ministry spokeswoman Maria Zakharova said Trump’s proposed “energy ceasefire” must be backed by concrete steps.
The efforts are easing supply concerns and adding to downward pressure on oil prices.
– Saudi pipeline disruption keeps supply concerns alive
However, reports that supply disruptions are affecting shipments following the closure of Saudi Arabia’s East-West Oil Pipeline after attacks on Sept. 10 limited the decline in prices.
According to market sources, some oil shipments to Europe that had been scheduled for September were canceled as of Sept. 15.
Up to 4% of global oil supply could remain at risk if the disruption to the pipeline is prolonged.
