Oil Prices Ease After US and Iran Pause Attacks
Oil prices eased in early trading on Sunday after the United States and Iran refrained from launching military strikes for a second straight day. The price of Brent crude oil, the international standard, dropped 4.9% to $92.02 per barrel for delivery in September.
This decline follows a 3.9% drop on Friday, when prices briefly hit $102 a barrel, their highest level since May. The surge in oil prices this month was driven by increased fighting in the Middle East and concerns over a return to all-out war, which would further slow global oil flows.
The Strait of Hormuz, a narrow waterway off Iran's coast that is critical for shipping oil to customers worldwide, has been a central concern for the oil market since the US and Israel attacked Iran in late February. While alternative routes have been sought, they are also under pressure, with attacks hitting Saudi oil tankers using the Red Sea last week.
The ongoing conflict with Iran has dragged consumer confidence lower, and economists believe inflation pressures have grown enough to warrant a 36% chance of the Federal Reserve hiking its main interest rate at an upcoming meeting. Higher interest rates would help keep a lid on inflation but could also slow the economy by making borrowing more expensive.