Oil eases at week’s open after top central banks warn on rates

Oil eased at the start of the week after leading central banks including the Federal Reserve signaled higher interest rates for longer to quell inflation, jeopardising the outlook for energy demand.

West Texas Intermediate retreated below $93 a barrel after climbing 2.5 per cent last week.

Fed Chair Jerome Powell warned of the “unfortunate cost” of tighter US policy, while a top European Central Bank official said there was “little choice” but to press on even if Europe’s economy tipped into recession.

Crude prices are on course for a third consecutive monthly drop in what would be the longest losing run in more than two years. The decline has erased all the gains made after the Ukraine crisis.

Offsetting some of the weakness, Saudi Arabia has said that OPEC+ could soon cut production.

Oil traders were also tracking developments in the Middle East. In Libya, clashes between militias in the capital left at least 23 dead, sparking concern of further upheaval in the OPEC nation that may put oil supplies at risk.

Iran, meanwhile, said exchanges with the US over a European Union proposal to revive a nuclear deal will drag on into next month. If concluded, an agreement would pave the way for Tehran to boost crude shipments.