Oil prices slide amid lingering US inflation worries

Oil prices fell on Tuesday as concerns over a potential Fed rate pause weighed on sentiment, though supply disruptions and reports of US approval for Ukraine’s use of long-range weapons against Russia curbed losses.

The international oil benchmark of Brent crude fell 0.6% to $72.65 per barrel at 12 p.m. local time (0900 GMT), down from the previous session’s close of $73.09.

The US benchmark West Texas Intermediate also decreased by 0.6% to $68.69 per barrel, compared to $69.12 at the prior session’s close.

Analysts warned that President-elect Donald Trump’s focus on tariffs could disrupt international trade, adding to the pressures on asset prices and the commodity market.

A potential trade war between the U.S. and China, the world’s largest oil consumers, coupled with persistent concerns over China’s economic activity, keeps risk perception elevated in the region. Uncertainty over the timeline for ending the Fed’s inflation fight further pressures asset prices, fueling speculation that an interest rate cut may be off the table next month.

Meanwhile, both benchmarks surged close to $3 per barrel on Monday with disruptions in major oil fields.

The Norwegian company Equinor announced that it had stopped production at the Johan Sverdrup oil field due to a power outage. The power outage caused about 755,000 barrels of daily production to stop.

An Equinor spokesperson stated that efforts were ongoing to restart production in the field, though the exact date of operation remains unclear.

The outage at Johan Sverdrup, Western Europe’s largest oil field, fuels market players’ concerns about supply shortages.

Also, oil production in Kazakhstan’s largest oil field, Tengiz, operated by US Chevron, declined by about 30% due to planned maintenance work.

Further, investors are cautious due to concerns that the Russia-Ukraine war will escalate.

Washington Post reported that the Joe Biden administration granted Kiev permission to use long-range American weapons on Russian territory for a limited time, according to two senior US officials.

Though, the US Department of Defense (Pentagon) did not confirm the news that the US administration would allow Ukraine to use long-range American weapons on Russian territory.

• Oil Prices
• US Department of Defense.