Global oil prices fell on Monday (Feb. 26), extending the losses on market views that higher-than-expected inflation could delay cuts to high interest rates that have been capping growth in global fuel demand.

Brent crude futures fell $0.39, or 0.5%, to $81.23 a barrel by 10:01 UTC, while US West Texas Intermediate crude futures (WTI) were down $0.34, or 0.4%, at $76.15. The dip extended losses registered last week, when Brent lost about 2%, and WTI fell more than 3% on signs that the US Federal Reserve is not in a hurry to cut interest rates, Reuters reported.

According to independent analyst Tina Teng, sentiment appeared focused on higher-for-longer interest rate expectations that lifted the US dollar and pressured commodity prices, which meant that a stronger dollar would make oil more expensive for buyers holding other currencies.

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Oil Prices Also Affected by War

Oil prices have been trading between $70 and $90 per barrel since November as rising US supply and concern over weak Chinese demand offset OPEC+ supply cuts despite two wars raging between Russia and Ukraine and Israel and Hamas.

Particularly for the Israel-Hamas War, White House national security adviser Jake Sullivan told CNN on Sunday (Feb.25) that US, Egyptian, Qatari, and Israeli negotiators have agreed on the basic provisions of a hostage deal during talks in Paris, but this is still being negotiated.

In a note to investors, Goldman Sachs analysts said that the geopolitical risk premium on Brent crude from Yemeni Houthis on ships in the Red Sea remained modest at only $2 a barrel.

However, the bank has raised its summer peak price projection to $87 per barrel, up from $85, after Red Sea disruptions have driven larger than expected draws in stocks held by developed countries.

Goldman Sachs still expected oil demand to grow by 1.5 million barrels per day (bpd) in 2024 but has cut its forecast for China while raising projections for the United States and India.

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