(MENAFN) Oil prices fell on Tuesday as investors awaited a key Federal Reserve meeting amid concerns over a feared banking crisis. International benchmark Brent crude decreased by 1.06 percent to trade at USD73.01 per barrel, while American benchmark West Texas Intermediate (WTI) fell by 1.08 percent to trade at USD67.09 per barrel. The decline in oil prices comes after both benchmarks showed a recovery from 15-month lows on Monday following regulators’ moves to shore up confidence.
Fears of economic recession have dominated the market following consecutive failures in the US and EU banking sectors. Although both benchmarks recovered slightly, concerns over a potential banking crisis continue to weigh on the market. Investors are now awaiting the next moves of the US Federal Reserve after the collapse of Silicon Valley Bank and Signature Bank earlier this month.
The Federal Reserve will kick off its two-day meeting on Tuesday before announcing its interest rate decision on Wednesday. Markets are pricing in a potential hike of 25 basis points, while investors expect the Fed to keep tackling high inflation as a main priority despite pressure on the banking system. In its toughest monetary tightening in decades, the US central bank made a total of 425-point rate hikes on seven occasions last year to fight record-high inflation that climbed to its highest level in over 40 years by mid-2022.
The decline in oil prices is also driven by concerns over the global economic outlook. The ongoing trade tensions between the US and China, along with the uncertainty surrounding Brexit, have dampened investor sentiment and raised concerns over a potential global economic slowdown. In addition, the recent surge in oil prices has put pressure on global markets, with some experts warning that higher oil prices could lead to a global economic crisis.
Despite these concerns, some analysts remain optimistic about the outlook for oil prices. The recent decline in prices is seen by some as a short-term correction, with prices expected to recover in the long run. However, the ongoing uncertainty in the global economy and the potential for a banking crisis continue to pose significant risks to the oil market.
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