Oil fell by more than 4 dollars due to inflation and Iraq’s exports

A picture of the emblem of the Organization of the Petroleum Exporting Countries (OPEC) at its headquarters in Vienna, Austria, March 21, 2016. REUTERS/Leonard Voiger

HOUSTON (Reuters) – Oil prices fell nearly $4 a barrel on Tuesday, amid concerns that inflation-fuelled weakness in global economies will slash fuel demand and because turmoil in Iraq has not affected OPEC’s crude exports.

Brent crude futures for October settlement fell $4.43, or 4.2%, to $100.62 a barrel by 11:00 AM ET (1500 GMT) after touching a session low of $99.66 a barrel.

The October contract expires on Wednesday and the most active November contract was at $99.19, down 3.6%.

US West Texas Intermediate crude fell $4.00, or 4.1%, to $93.01.

Inflation is close to double digits in many of the world’s largest economies. This could prompt central banks in the United States and Europe to resort to sharper increases in interest rates, which could slow economic growth and affect fuel demand. Read more

“Investors are now waiting for the monthly employment data on Friday,” said Kunal Sawhney, CEO of the Calkin group of equity researchers.

Prices fell after comments from Iraq’s state-owned oil marketing company SOMO that the country’s oil exports were not affected by the unrest, Giovanni Stonovo, an analyst at UBS, said. Read more

The worst fighting in Baghdad in years between Shiite groups continued for a second day. Read more

However, Sumo said it could redirect more oil to Europe if needed. Read more

Prices felt more pressure when Gazprom Neft was the fastest growing oil producer in Russia (SIBN.MM)It said it plans to double oil production at the Zagren field in West Siberia to more than 110,000 barrels per day. Read more

Investors will be watching the meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known collectively as OPEC+, on Sept. 5.

Saudi Arabia last week raised the possibility of OPEC+ production cuts, which sources said could coincide with an increase in supplies from Iran if it strikes a nuclear deal with the West.

“I think the market is torn between stagnation and COVID-19 shutdown fears pressing down on prices and fears of ample supply pressures upwards,” said Andrew Lipow, president of Lipow Oil Associates Associates in Houston.

The American Petroleum Institute is due to release data on US crude stocks at 4:30 PM ET (2030 GMT) on Tuesday.

A preliminary Reuters poll showed on Monday that US crude oil inventories are likely to have fallen in the week ending August 26.

(Additional reporting by Arathi Sumasekhar in Houston, Rowena Edwards in London.)

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