Oil prices dip on fears that Fed rate hike may reduce fuel demand

Oil prices dropped on Monday due to fears that an expected hike in interest rates in the United States may hamper fuel demand growth.


Prices for the September delivery of Brent crude oil were down by 62 cents, or 0.60%,  to US$102.58 a barrel  at 10.15 local time in Thailand.

Meanwhile, the September delivery price of US West Texas Intermediate (WTI) crude oil fell by 72 cents, or 0.76%, to US$93.98 a barrel.


Oil futures have all been turbulent in recent weeks as traders try to balance the prospect of further interest rate hikes that could hinder economic activity and cut demand growth amid tight supply from Western sanctions on Russian invasion of Ukraine.


Fed officials signaled that the central bank will likely hike rates by 75 basis points at its upcoming meeting on July 26-27.


According to Reuters, the European Union members agreed last week to alter sanctions to allow Russian state-owned companies to ship oil to third countries, reducing risks to global energy security.

However, Russian Central Bank Governor Elvira Nabiullina stated on Friday that Russia will not deliver oil to countries that decide to impose a price ceiling on its gasoline.