Global benchmark Brent crude was last down more than 2% a barrel at $113.86 ahead of a meeting of oil producing countries later in the day, which is expected to pave the way for output increases. OIL/Register now for FREE unlimited access to Reuters.comThe fall in oil prices gathered pace after the Financial Times reported that Saudi Arabia may be prepared to raise oil production in the event of a sharp drop in Russia's output.
"This will be well received by Western leaders given inflation – and inflation expectations – remain eye wateringly high, and central banks try to raise rates at the risk of tipping their economies into a recession," said Matt Simpson, senior market analyst at City Index in Sydney. "More supply essentially soothes some of those inflationary fears, even if there is a lot more work to do when it comes to fighting inflation."
Investors' worries over inflation and recession have festered amid uncertainty caused by the U.S. Federal Reserve's pace of interest rate hikes, the impact of the Russia-Ukraine war on food and commodity prices, and supply chain constraints exacerbated by strict COVID-19 curbs in China. On Wednesday, a survey showing stronger-than-expected U.S. manufacturing activity in May did little to assuage those concerns. Jamie Dimon, chairman and chief executive of JPMorgan Chase & Co
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