Aug 30, 2022 02:30AM ET
By:AnalysisWatch
Oil prices fell on Tuesday, erasing some of the previous session's gains, as the market feared that more aggressive interest rate hikes by central banks would lead to a global economic slowdown and a drop in fuel demand.
U.S. West Texas Intermediate crude was at $96.86 a barrel, down 14 cents, or 0.1%, after a 4.2% rise in the previous session.
Inflation is approaching double digits in many of the world's largest economies, a level not seen in nearly half a century, which could prompt U.S. and European central banks to resort to more aggressive interest rate hikes.
Also weighing on prices is the fact that Russia's oil production has exceeded expectations in the wake of the Ukraine war, the head of the International Energy Agency (IEA) said Monday. However, he said Russia, which calls its actions in Ukraine a "special operation," will find it increasingly difficult to maintain production as Western sanctions begin to bite.
In a long-running dispute over the formation of a new government since last year's elections, government security forces and militias loyal to Shiite cleric Moqtada al-Sadr clashed around the Green Zone, housing government headquarters and embassies in the capital Baghdad, killing 20 people.
Supply shortages have also helped support prices. Saudi Arabia, the top producer in the Organization of Petroleum Exporting Countries (OPEC), last week raised the possibility of cutting production, which sources say could coincide with an increase in Iranian supply should Iran reach a nuclear deal with the West.
The American Petroleum Institute, an industry group, will release data on U.S. crude inventories on Tuesday, followed on Wednesday by the Energy Information Administration, the statistical arm of the U.S. Department of Energy.
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