Tuesday saw a decline in oil prices, wiping out some gains from the previous session as the market worried that more aggressive interest rate increases from central banks may cause a downturn in the global economy and weaken fuel consumption.
After rising 4.1% on Monday, the greatest gain in more than a month, Brent crude futures LCOc1 for October settlement fell 81 cents, or 0.7%, to $104.28 per barrel by 0359 GMT.
The more active November contract was trading at $102.33, down 0.6%, and the October contract expires on Wednesday.
Following a 4.2% increase in the previous session, U.S. West Texas Intermediate crude CLc1 was trading at $96.68 per barrel, down 33 cents or 0.3%.
Many of the world's largest economies are seeing inflation that is close to double digits, a level not seen in over 50 years. As a result, central banks in the US and Europe may need to increase interest rates more firmly.
"Because of the expectation that the Federal Reserve will keep raising interest rates, risk appetite has decreased.
The image of the energy crisis becomes more ambiguous as natural gas prices decline in Europe "according to Haitong Futures analysts.
Russia's oil production has surpassed forecasts since the end of the Ukraine conflict, according to the president of the International Energy Agency (IEA), which is also putting pressure on pricing.
But he claimed that if Western sanctions start to bite, Moscow, which refers to its efforts in Ukraine as "a special operation," will find it harder and harder to maintain production.
When the existing plan expires, IEA member countries may decide to release additional oil from their strategic petroleum reserves (SPR) if they deem it essential.
The second-largest producer in OPEC, Iraq, experienced political turmoil on Monday night, which helped keep prices up.
In a protracted conflict over the creation of a new administration since elections last year, government security forces and militias loyal to Shi'ite cleric Moqtada al-Sadr battled near the Green Zone, which contains government offices and embassies in the capital Baghdad, killing 20 people.
The domestic situation in (Iraq), a significant oil exporter with a daily output of about 4 million barrels, "has no less impact on oil prices than Iran," according to Haitong's analysts.
A constraint on supply is another factor supporting pricing. Last week, the Organization of the Petroleum Exporting Countries (OPECleading )'s producer, Saudi Arabia, said that production would be reduced. According to sources, this might coincide with an increase in Iranian supply should Iran successfully negotiate a nuclear agreement with the West.
On September 5, OPEC+, which consists of OPEC, Russia, and other producers, meets to decide on policy. The U.S. Department of Energy's statistical arm, the Energy Information Administration, will disclose data on U.S. crude inventories on Wednesday after the American Petroleum Institute, an industry group, on Tuesday.
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