Oil prices drop on demand concerns after rate hikes
Oil prices slumped on Friday as demand concerns surfaced after this week's rate hikes, but continued supply tightness and new sanctions on Iran limited the downside trend.
Brent crude futures fell 35 cents, or 0.3%, to $119.46 at 0620 GMT, while West Texas Intermediate (WTI) crude futures fell 43 cents, or 0.4%, to $117.16 a barrel.
If losses continue throughout the day, Brent futures will see their first weekly drop in five weeks, while US crude oil futures will see their first drop in eight weeks.
Brent crude and WTI saw some heavy selling intraday as markets tried to price in a plethora of central bank hikes and potential recessions. Unfortunately, none of this changes the fact that despite all the risks, OPEC+'s crude oil supply and global refining capacity are insufficient, and gasoline and diesel prices are stuck in a stagflationary vortex.
The moves came in the wake of the US Federal Reserve's 75bp rate hike Wednesday, the highest since 1994.
Some central banks in Europe increased interest rates by as much as shocking amounts on Thursday, hinting at even higher borrowing costs to rein in rising inflation, which has eroded savings and squeeze corporate profits.
In South America, Argentina's central bank raised its benchmark rate for the most in three years on Thursday as it battled inflation, which was over 60%.
The market had been watching the negotiations between the West and Iran in recent months in anticipation of a revival of the nuclear deal. However, after the US announced new sanctions against Iran, the ongoing supply-side problems in the market remain hot on the agenda.
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