Brent slides after Fed meeting minutes indicate interest rate hikes

Front-month ICE Brent has declined by $1.43/bbl on the day, to $80.93/bbl at 09.00 GMT.

PHOTO: The Federal Reserve building in Washington D.C. Getty Images

Upward pressure:

Russia is planning to cut oil exports from its western ports by up to 25% in March compared to February to boost prices, three sources in the Russian oil market have told Reuters. Russia has not confirmed this info, but has previously announced country-wide production cuts of 500,000 b/d in March compared to January.

The Caspian Pipeline Consortium (CPC) declared that oil lifting from the CPC Marine Terminal was suspended on 18 February due to bad weather conditions. CPC transports oil from the Tengiz oilfield in Kazakhstan to an export terminal at the Russian Black Sea port of Novorossiysk. Kazakhstan is a member of OPEC+ and shares a border with Russia. A prolonged suspension could lead Kazakhstan to cut its oil output.

Downward pressure:

Brent has come under pressure after minutes from the Federal Reserve’s (Fed) meeting were released yesterday. During the meeting, which was held between 31 January – 1 February, most participants supported further interest rate increases until inflation gets on a sustained downward path towards 2%.

Investors remain concerned that higher interest rates will slow the economies of the US and other countries, and come with knock-on effects of dented oil demand. It could also prop up the US dollar and make dollar-denominated commodities like Brent less attractive to investors holding other currencies.

“Energy traders not only have to keep up with all the latest supply and demand drivers, but also on how much the dollar might rebound given the Fed’s tightening path,” says Ed Moya, senior market analyst at OANDA. “Oil will likely remain heavy here as inventories are up, refinery maintenance is here, and on global growth concerns,” Moya adds.

By Nitin Sharma

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