Oil retreats and dollar rises to highest level in 19 months
Oil prices fell by more than a dollar per barrel amid hopes for political settlements ending the war in Ukraine and the conflict in the Middle East, while the dollar rose to its highest level in 19 months, supported by expectations of a US interest rate hike.
Oil prices fell by more than a dollar per barrel on Thursday, amid growing hopes for political settlements ending the war in Ukraine and the conflict in the Middle East, as markets await the outcomes of diplomatic moves regarding Iran and the Strait of Hormuz. Brent crude futures fell by $1.14 (1.2%) to $91.62 per barrel, and US West Texas Intermediate crude futures fell by $1.04 (1.2%) to $85.49. The decline came after both crudes rose in Wednesday's session, following their lowest levels in two months in the previous session. Analysts attributed the drop in oil prices to signs of behind-the-scenes diplomatic moves to reach a ceasefire between Russia and Ukraine, along with reduced chances of an expanded confrontation with Iran ahead of the upcoming US-China summit next week. However, continued uncertainty over navigation in the Strait of Hormuz limits the potential for further price declines. Meanwhile, the dollar continued its gains, reaching its highest level in 19 months, supported by increasing expectations of a US interest rate hike. Russian-Ukrainian talks in Abu Dhabi resulted in an agreement to implement a large-scale prisoner exchange, despite ongoing disagreements on key issues, most notably the territorial question. Ukrainian President Volodymyr Zelensky expressed hope for tangible results to end the war this year.