Title: Oil lower on demand concerns, but tight supply caps downside
Jun 17, 2022 02:41AM ET
Oil prices eased slightly on Friday as demand concerns emerged after this week's interest rate hikes, although ongoing supply tightness and new sanctions on Iran limited the downward trend.
Brent crude futures fell 35 cents, or 0.3%, to $119.46 a barrel at 0620 GMT, while US West Texas Intermediate (WTI) crude futures fell 43 cents, or 0.4%, to $117.16 a barrel.
If the losses continue throughout the day, Brent futures would see their first weekly decline in five weeks, while US crude futures would see their first decline in eight weeks.
Brent and WTI crude sold off heavily during the day as markets tried to price in a plethora of central bank rate hikes and possible recessions.
Unfortunately, this does not change the fact that despite these risks, the world continues to suffer from a shortage of OPEC+ crude oil supply and global refining capacity, pushing up petrol and diesel prices in a stagflationary embrace
Central banks across Europe raised interest rates on Thursday, in some cases by amounts that shocked markets, and hinted at even higher borrowing costs ahead to stem rising inflation that is eroding savings and squeezing corporate profits.
In South America, Argentina's central bank raised its key interest rate on Thursday by the most in three years to fight inflation above 60%.
The moves followed Wednesday's 75 basis point rate hike by the US Federal Reserve, the highest since 1994.
But investors remained focused on tight supply after the United States announced new sanctions against Iran.
Washington on Thursday imposed sanctions on Chinese and Emirati companies and a network of Iranian firms involved in exporting Iranian petrochemicals. The move could be aimed at increasing pressure on Tehran to revive the 2015 nuclear agreement.