Oil prices decline after Federal Reserve hikes interest rate by 75 basis points

22 Sep 2022 , 07:59 AM

Following a major increase in interest rates by the U.S. Federal Reserve to combat inflation, oil prices started to decline in early Asian trade on Thursday. Future fuel demand is now being clouded by concerns about the state of the global economy.

Brent crude futures were down 16 cents, or 0.2%, to $89.67 per barrel, while WTI crude in the US was down 15 cents to $82.79 per barrel.

On Wednesday, the Fed increased its target interest rate by 75 basis points for the third time, to a range of 3.00-3.25%, and hinted at other significant rises to come. Oil and risky assets like equities declined in response to the news, and the dollar rose to a 20-year high versus a basket of other currencies, increasing the cost of petroleum for those who aren’t using the dollar.

The U.S. Energy Information Administration reported on Wednesday that the country’s gasoline demand during the previous four weeks dropped to 8.5 million barrels per day (bpd), its lowest level since February.

In other news, Germany on Wednesday nationalized gas importer Uniper, while Britain announced it would cut business energy costs in reaction to a worsening supply problem that has shown Europe’s dependency on Russian fuel.

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