By Anadolu Agency
May 5, 2023 3:09 pmOil prices recorded their steepest declines in the last eight weeks, dropping over 7% during the week ending May 5, as markets braced for weak demand following the US Fed’s decision to raise interest rates for the tenth time in just over a year and on signs of another banking crisis in the US.
International benchmark Brent crude was trading at $74.45 per barrel at 15.28 p.m. (1228 GMT) on Friday, posting a 7% fall from the Monday session that opened at $80.11 a barrel.
The American benchmark West Texas Intermediate (WTI) registered at $70.51 per barrel at the same time on Friday, decreasing 8% relative to the opening price of $76.66 a barrel on Monday.
The Fed raised interest rates by 25 basis points on Wednesday, marking the tenth hike in just over a year and raising the target range for federal funds to 5% to 5.25%, the highest since August 2007.
While Fed Chair Jerome Powell said in his post-meeting press conference that inflation has ‘moderated somewhat’ since mid-2022, he noted that ‘pressures run high’ and that the decision to pause rate hikes was ‘not yet made.’
He stated that the Fed faces a number of challenges, including the ongoing financial crisis in the US as well as rising interest rates to combat inflation and provide a soft landing.
The country has just resolved one of its banking failures, with US regulators closing the troubled US-based First Republic Bank on Monday and with JPMorgan Chase set to acquire its assets. However, signs of another failure have sparked market concern, with PacWest shares falling 50.6% on Thursday as the bank negotiates a bailout with potential partners and investors.
Concerns about dwindling oil demand were heightened after China reported weaker-than-expected manufacturing activity, casting doubt on the country’s post-COVID economic recovery.
The markets also struggled with supply-side woes after Iran’s Islamic Revolutionary Guards Corps (IRGC) confirmed the seizure of a foreign oil tanker in the Strait of Hormuz.
Wednesday’s incident comes a week after the Iranian army’s naval division seized a Marshal Islands-flagged ‘transgressor’ tanker and directed it to the coastal waters of Iran in the Sea of Oman following an encounter with an Iranian vessel.
We use cookies on our website to give you a better experience, improve performance, and for analytics. For more information, please see our Cookie Policy By clicking “Accept” you agree to our use of cookies.
Read More