Crude oil prices fell on Friday as a stronger US dollar and the Federal Reserve’s decision to hold interest rates steady fuelled fresh concerns about the trajectory of the US economy and global oil demand.
Brent crude dropped by 0.1%, trading at $71.76 per barrel, down from $71.83 at the previous session’s close. Similarly, the US benchmark, West Texas Intermediate (WTI), slipped by 0.1% to $68.26 per barrel, compared to its prior session close of $68.33.
The market downturn was compounded by lingering uncertainty over potential trade actions by former US President Donald Trump, including the imposition of new tariffs, which could dampen global oil demand.
Crude prices faced additional pressure from a strengthening dollar, which gained 0.2% to open at 104 on the US dollar index after the Fed’s decision on Wednesday to maintain its benchmark interest rate at 4.25% to 4.50%. The Fed also raised its inflation and unemployment projections for 2025 while lowering its economic growth forecast.
Fed Chairman Jerome Powell acknowledged concerns about tariffs, noting that they could strain consumer spending and overall economic performance. Meanwhile, Trump urged the central bank to cut rates, criticising the decision to hold them steady.
Despite the downward pressure, new US sanctions on Iran and OPEC+’s planned production cuts helped limit further losses by raising concerns about tighter supply.
The US Treasury Department imposed sanctions on 19 entities and vessels linked to Iran’s oil exports, while the State Department sanctioned a Chinese oil terminal for purchasing and storing Iranian crude from a sanctioned vessel.
Daniel Hynes, senior commodity strategist at the Australia and New Zealand Banking Group, predicted a potential 1 million barrels per day decline in Iran’s oil exports due to these tighter restrictions.
He noted that while rising OPEC+ output could counterbalance the decline, planned production cuts by OPEC+ members are likely to keep overall output stable in the coming months.
