By Adedapo Adesanya
Oil prices settled lower on Friday as traders evaluated hints about the US Federal Reserve Bank’s inflation-fighting policy, with Brent crude futures down by 39 cents or 0.43 per cent to $89.31 a barrel, and the US West Texas Intermediate (WTI) crude futures losing 13 cents or 0.16 per cent to trade at $83.40 a barrel. For the week, Brent lost more than 5 per cent and WTI by more than 4 per cent.
Federal Reserve Chairman, Mr Kevin Warsh, said yesterday that inflation is still too high and suggested the central bank may have to raise interest rates in the coming months to bring it down, a clearer signal than he has previously sent about his economic outlook.
In his first high-profile speech at the US central bank’s annual conference in Jackson Hole, Wyoming, Mr Warsh acknowledged that recent US reports show that inflation has cooled a bit, but “they do not tell me that underlying trends have meaningfully improved.”
He pointed to data showing that inflation remains stubbornly above the central bank’s 2 per cent target. Mr Warsh replaced Jerome Powell in late May after his predecessor’s term ended.
The US-Israeli war with Iran completed its sixth month on Friday with traders watching as flows of oil through the Strait of Hormuz made a choppy recovery, through which 20 per cent of global oil production flowed before the war started.
The US has cleared mines from the internationally recognised shipping lanes and can technically get vessels through, but Iran’s military capability will still keep most commercial operators away.
On Thursday, seven commodity vessels transited, down from 17 a day earlier and below the 10-day average of 15, preliminary shipping data showed on Friday. The Bab el-Mandeb, another major maritime chokepoint, saw 17 commodity vessels pass through, with six entering and 11 exiting.
Mediators are stepping up efforts to get the Strait of Hormuz reopened after Iran agreed to draw up a list of conditions to restore normal traffic after a Qatari emissary pressed the Iranians to respect freedom of navigation.
Earlier in the week, the US announced what it called the “toughest sanctions in history” on Iran, to which the Islamic Republic said the sanctions were an “inhumane and hostile act” that had lost their effectiveness.
Venezuela, one of the five founding members of the Organisation of the Petroleum Exporting Countries (OPEC) in 1960 and which played a central role in assembling the organisation, is considering leaving the oil production group.
