By Adedapo Adesanya
The price of the Brent crude oil benchmark depreciated on Tuesday by $1.33 or 1.2 per cent to $113.32 per barrel amid a push by President Joe Biden to bring down soaring fuel costs in the United States.
This action also caused the price of the West Texas Intermediate (WTI) crude benchmark to decline by $1.34 or 1.2 per cent during the session to $108.18 per barrel.
As the United States struggles to tackle soaring gasoline prices and inflation, it is planning to take some measures which include pressuring major US firms to help ease the pain for drivers during the country’s peak summer demand.
Mr Biden is expected on Wednesday to call for a temporary suspension of the 18.4-cents a gallon federal tax on gasoline.
Analysts point out that oil traders understand that higher oil prices would lead to a more aggressive tag team onslaught from the US Fed pushing rates higher.
Recently, the US central bank had increased the 75 points to the largest rate in 28 years.
Seven oil companies are set to meet President Biden on Thursday, under pressure from the White House to drive down fuel prices as they make record profits.
Reports, however, show that some executives are not comfortable with Chevron Chief Executive Michael Wirth, noting that criticizing the oil industry was not the way to bring down fuel prices.
“These actions are not beneficial to meeting the challenges we face,” Mr Wirth said in a letter addressed to the US President, which sparked a response from Mr Biden saying the industry was being too sensitive.
Despite worries about inflation, demand is still on the road to recovery to pre-COVID levels and supply is expected to lag demand growth, keeping the market tight.
There are expectations that oil demand will improve further, benefiting from the reopening of China, summer travel in the northern hemisphere and the weather getting warmer in the Middle East.
Also, European oil sanctions on Russia for its invasion of Ukraine have yet to take effect, meaning the supply will only get tighter.
