Oil prices sink $2/bbl on possible Iran oil exports, rising interest rates

Reuters

Published Aug 24, 2022 08:37PM ET

Updated Aug 25, 2022 03:17PM ET

By Laila Kearney

NEW YORK (Reuters) -Oil prices slumped by about $2 a barrel on Thursday in volatile trade as investors braced for the possible return to global markets of sanctioned Iranian oil exports and on worries that rising U.S. interest rates would weaken fuel demand.

Brent crude settled at $99.34 a barrel, shedding $1.88, or 1.9%. U.S. West Texas Intermediate crude settled at $92.52 a barrel, losing $2.37, or 2.5%.

Talks between the European Union, the United States and Iran UPDATE 4-Iran reviews U.S. response to EU nuclear text for revival of 2015 pact - Reuters to revive the 2015 nuclear deal are continuing, with Iran saying it had received a response from the United States to the EU's "final" text to resurrect the agreement.

"Nobody wants to jump in here and commit to a size position when you can get ambushed by an Iranian headline at any given moment," said Bob Yawger, director of energy futures at Mizuho, citing thin trading volumes during the session.

Investors also were waiting for scheduled remarks on Friday by U.S. Federal Reserve Chair Jerome Powell at the Kansas City Fed’s Economic Policy Symposium in Jackson Hole, Wyoming.

"The (market) is a little bit concerned about what Jerome Powell is going to say tomorrow about rising interest rates," said Phil Flynn, an analyst at Price Futures group in Chicago.

Powell is expected to summarize where the Fed stands in its fight to control inflation, including information about its rate-path hike in the long and short-term.

Softening U.S. gasoline demand raised concerns about slowing economic activity and pushed prices lower.

Overall U.S. demand for gasoline sunk in the most recent period last week, leaving the four-week average of daily gasoline product supplied 7% below the year-earlier period, according to the latest data released by the Energy Information Administration.