Adedapo Adesanya
By Adedapo Adesanya
Brent crude futures dropped below $90 per barrel after it shed 74 cents or 0.8 per cent to $89.74 per barrel as inflation dampened hopes for near-term US interest rate cuts, even as worries remain that Iran might attack Israel’s interests.
Also, the US West Texas Intermediate (WTI) crude futures crashed by $1.19 or 1.4 per cent to $85.02 per barrel, as market analysts said it would be difficult to maintain Brent above $90 a barrel in the second half of the year without actual supply disruption associated with geopolitical events.
The US, which is the world’s largest oil consumer, reported a 0.4 per cent rise in the consumer price index last month after advancing by the same margin in February, the Labor Department’s Bureau of Labor Statistics said.
Minutes from the US Federal Reserve showed officials worried that progress on inflation might have stalled and a longer period of tight monetary policy would be needed.
Investors who had expected a rate cut in June now see September as a likelier timing, following a third straight consumer inflation reading that exceeded forecasts.
In Europe, central bank officials kept borrowing costs at a record high as expected but signalled the European Central Bank (ECB) may soon cut rates.
Slower rate cuts could affect oil demand. Meanwhile, the Organisation of the Petroleum Exporting Countries (OPEC) stuck to its forecast for relatively strong global demand growth in 2024.
The cartel said world oil demand will rise by 2.25 million barrels per day in 2024 and by 1.85 million barrels per day in 2025.
OPEC and its allies, known as OPEC+, last week agreed to keep oil output cuts in place until the end of June. The alliance implemented a series of output cuts in late 2022 to support the market. A new cut of 2.2 million barrels per day for the first quarter took effect in January and was later extended to cover the second quarter.
Meanwhile, Israel is preparing from Iran for what it sees as an imminent attack in retaliation for the attack of its embassy in Syria on April 1.
An airstrike on the Iranian embassy compound in the Syrian capital of Damascus levelled a building and killed a top Iranian general and six other diplomats. Iran blamed the attack on Israel, which has not declared responsibility.
In the same vein, Israel and Hamas began a fresh round of negotiations in their more than six-month-old Gaza war but those talks have yielded no agreement.
