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Source: Newsmaker.id
Oil prices weakened again in early European trading on Thursday (Sept. 17), as a Federal Reserve interest rate hike and hopes for a partial recovery in Saudi Arabia's export capacity weighed on the market. Brent crude fell 1.4% to US$104.31 per barrel, while West Texas Intermediate (WTI) dropped 1.1% to US$100.28. This decline followed sharp corrections in both benchmarks during the previous session.
The Fed unanimously raised interest rates by 25 basis points to a range of 3.75%–4.00%, with the majority of officials projecting at least one additional hike this year. The policy aims to curb persistently high inflation; however, rising borrowing costs threaten to slow economic activity and dampen oil demand.
Expectations of improved supply also weighed on prices. According to XS.com analyst Samer Hasn, Saudi Arabia is rerouting oil loadings away from the non-operational Yanbu port, while some Saudi oil flows have resumed. Shipments through the Strait of Hormuz are continuing under US protection, although shipping activity remains well below pre-war levels.
Security risks continue to cast a shadow over the export recovery. The Houthi group claimed to have shot down a Saudi F-15 fighter jet over Marib, Yemen, though the Saudi government has not confirmed the loss. Control over various territories, including an island in the Bab al-Mandeb Strait, has also enhanced the Houthis' ability to disrupt Saudi oil shipments via the Red Sea.
Meanwhile, EIA data showed US commercial crude oil inventories fell by approximately 640,000 barrels in the week ending September 11—a smaller drop than anticipated—while gasoline and distillate stocks rose. Despite the price correction, Capital Economics suggests that resilient global demand and a recovery in Chinese imports could keep oil prices elevated for longer if Middle East supplies remain constrained.
Newsmaker Analysis: The recent decline in oil prices remains vulnerable to a reversal, as the anticipated recovery in Saudi exports has not yet fully materialized. While Federal Reserve interest rate hikes weigh on demand prospects, shipping disruptions in the Strait of Hormuz and the Red Sea continue to threaten supply availability. Should Saudi exports recover sustainably, the downward correction in oil prices could persist; however, fresh attacks on energy infrastructure or increased buying by China could drive prices back up. Consequently, the actualization of a supply recovery is a critical factor in determining whether the price decline will be sustained. (arl)
Source: Newsmaker.id