Oil prices declined on Friday due to reports suggesting the US administration is hesitant to get involved in the conflict between Israel and Iran and the Federal Reserve's (Fed) upward revision of its inflation forecast.
International benchmark Brent crude fell by 2.6%, trading at $75.28 per barrel at 09.44 a.m. local time (0644 GMT), down from $77.32 at the previous session's close.
Similarly, US benchmark West Texas Intermediate (WTI) decreased by about 2.4%, settling at $73.23 per barrel, compared to $75.02 in the prior session.
US President Donald Trump has expressed reluctance to intervene in the escalating tensions in the Middle East, according to the New York Post, citing sources close to the administration.
Three individuals familiar with the matter said Trump has recently referenced the case of oil-rich Libya, which descended into a decade-long anarchy following Western intervention in 2011. They claimed his hesitancy stems from concerns that overthrowing Iran's Supreme Leader Ayatollah Ali Khamenei could lead to the creation of "another Libya."
These reports have eased fears of further geopolitical escalation in the Middle East, a region that holds a significant portion of global oil reserves, and in turn reduced concerns over potential supply disruptions, adding to the downward pressure on prices.
Meanwhile, the Fed's updated projections have also weighed on oil prices. In its latest meeting, the Fed raised its year-end core Personal Consumption Expenditures (PCE) inflation forecast from 2.8% to 3.1%, while lowering its growth forecast from 1.7% to 1.4%.
The Fed's stance suggests that if inflation continues to rise, it may pause interest rate cuts. Higher interest rates could strengthen the US dollar against other currencies, leading to reduced oil demand and further downward pressure on prices.
By Humeyra Ayaz
Anadolu Agency
energy@aa.com.tr