Oil Price Drop Eases Inflation Fears Ahead of Fed Meeting
Global share markets reacted cautiously on Monday to developments in the Middle East, where a pause in fighting between Iran and the US led to a decline in oil prices. The Brent crude price dropped by 5.2% to $91.73 per barrel, while U.S. crude fell 5.4% to $84.45.
This decrease in oil prices provided some relief from inflation fears, leading markets to slightly pare the probability of rate hikes from the Federal Reserve ahead of its Wednesday meeting. The Fed's Chair Kevin Warsh remains unclear about a potential rate increase.
NAB Group Chief Economist Sally Auld stated that 'developments in the Middle East have moved in a positive direction over the weekend, adding some credibility to the notion that oil above $100 a barrel seems to induce de-escalatory behavior from both sides.'