Oil prices fall in early trade due to demand fears

9 Jun 2023 , 10:09 AM

Early morning Asian trade saw a decline in oil prices as investor doubts about the probability of an agreement between the United States and Iran over its nuclear programme exceeded supply concerns from international suppliers.

Brent crude futures had fallen 36 cents, or 0.5%, to $75.60 per barrel, while West Texas Intermediate crude futures had fallen 33 cents, or 0.5%, to $70.96 per barrel.

After the U.S. and Iran both refuted a Middle East Eye report that they were close to a nuclear deal, both benchmarks dropped by about $1 on Thursday, recovering from their earlier losses of more than $3.

They were on track for losses of approximately 1% for the week and a second week of losses. Following Saudi Arabia’s weekend commitment to significant output cutbacks, oil prices climbed early this week. However, their gains were quickly wiped out by rising U.S. gasoline supplies and disappointing Chinese export statistics.

There is pressure on prices from both the upside and the downside, with concerns over a tighter supply and increased demand as the United States begins the driving season being balanced by worry over future increases in interest rates in the United States and a gradual increase in gasoline demand in China.

On Thursday, the US and Iran both denied that they were close to reaching an interim agreement in which Tehran would curtail its nuclear programme in exchange for the lifting of sanctions, which included the ability to export up to 1 million barrels of oil a day.

However, other analysts claim that if the U.S. Federal Reserve decides against raising interest rates at its upcoming meeting on June 13–14, oil prices may rise. According to Reuters’ survey of economists, there won’t be a hike during the meeting.

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