Oil Prices Slump on Easing Tensions and Rate Hike Expectations

Oil prices dropped on Wednesday due to easing tensions between the US and Iran, as well as expectations of a 25-basis-point rate hike by the Federal Reserve. International benchmark Brent crude futures for November delivery traded at $107.46 a barrel, down 1.3% from the previous close of $108.75.

The passage of a war powers resolution in the US House of Representatives on Tuesday directing President Donald Trump to withdraw US forces from the conflict with Iran contributed to the decline in oil prices. The resolution's sponsors cited rising gasoline and mortgage costs, inflation, billions in government spending, and US military casualties as the costs of the conflict.

Market expectations for a 25-basis-point rate hike by the Fed are also weighing on prices, as it is expected to slow economic activity and oil demand in the US. However, supply disruptions due to attacks on Saudi Arabia's East-West Oil Pipeline remain a concern, limiting the decline in prices.