Oil prices declined on Monday due to astrengthening U.S. dollar and the possibility of an increase in interest rate by the U.S. Federal Reserve in May. Brent crude futures fell 1.8% to $84.76 a barrel, while U.S. West Texas Intermediate crude dropped 2.05% to $80.83 a barrel.
Despite both contracts having their fourth consecutive weekly gain last week, the longest such streak since mid-2022, investors are now concerned that a rise in interest rates will dampen the hopes of economic recovery. As the U.S. dollar continues to strengthen alongside interest rate hikes, oil prices, which are denominated in dollars, become more expensive for holders of other currencies.
Meanwhile, the International Energy Agency (IEA) predicted that China will account for the majority of the demand rise in 2023, thus the release of China's first-quarter gross domestic product (GDP) figures on Tuesday at 0200 GMT is anticipated to be favourable for commodities prices.
The IEA issued a caution in its monthly report, stating that the output reductions planned by OPEC+ countries ran the danger of escalating the anticipated oil supply deficit in the second half of this year, which would be detrimental to consumers and the global economic recovery.
Despite rising global crude prices and requests from some nations for a lower price ceiling to limit Moscow's income, the Group of Seven (G7) coalition will maintain a $60 per barrel price limitation on seaborne Russian oil, a coalition official said.
Sources told Reuters on Monday that the Kurdistan Regional Government (KRG) and the federal government of Iraq have also resolved technical concerns necessary to resume northern oil exports from the Turkish port of Ceyhan to international markets.
After an arbitration decision by the International Chamber of Commerce (ICC) ordered Turkey to pay Baghdad penalties of $1.5 billion for the KRG's unlawful exports between 2014 and 2018, Turkey stopped Iraq's 450,000 barrels per day (bpd) of northern exports on March 25.
