Oil prices fall amid economic headwinds

Oil prices experienced slight declines on Tuesday as economic concerns overshadowed geopolitical tensions, with attention focused on Israel and its impending response to Iran’s recent attack on Israeli territory.

Brent crude futures for June delivery settled 8 cents lower at $90.02 a barrel, while U.S. crude for May delivery fell 5 cents to end at $85.36.

Federal Reserve Chair Jerome Powell remarked that recent data indicating stronger-than-expected inflation suggests that it may take longer than anticipated for the Fed to achieve its inflation target of 2%.

Tim Snyder, an economist at Matador Economics, commented on the impact of rising interest rates on markets, expressing concerns about the Fed’s perceived indecision amid ongoing economic inflation.

While tensions between Iran and Israel initially boosted oil prices to $92.18 on Friday, they retreated following a less severe-than-expected Iranian counter-attack over the weekend. Market sentiment remained cautious, with expectations of a restrained response from Israel.

U.S. Treasury Secretary Janet Yellen announced plans for new sanctions against Iran in response to its attack on Israel, aiming to reduce Iran’s oil export capacity.

Israel’s war cabinet postponed its third meeting until Wednesday, amidst international pressure to prevent further escalation in the Middle East conflict.

Fiona Cincotta, a senior financial market analyst at City Index, highlighted the potential for increased oil risk premiums in response to any retaliation, given Iran’s significant role as OPEC’s third-largest producer.

President Ebrahim Raisi of Iran reaffirmed the country’s commitment to defending its interests, following Israel’s warning of retaliation against Tehran’s recent attacks.

Inventories data from the American Petroleum Institute revealed a 4.1 million barrel increase in U.S. crude oil inventories, contrary to expectations of a 1.4 million barrel rise, according to an extended Reuters poll. Gasoline and distillates stockpiles, however, saw declines.