The price of oil has fallen below $110 U.S. per barrel as countries around the world continue to
aggressively raise interest rates to dampen inflation.
West Texas Intermediate (WTI) crude oil, the U.S. benchmark, fell to $109.90, dropping more
than 6%, its biggest daily drop since March of this year, after the U.S. Federal Reserve
endorsed for the first-time raising interest rates into “restrictive territory,” a strategy that can lead
to an economic downturn and hurt energy consumption.
Brent crude oil, the international standard, fell more than $6 U.S. to settle at $113.02 U.S. per
barrel.
Last week, the Bank of England again raised interest rates to combat high inflation, and the
European Central Bank signalled that it will raise interest rates for the first time in 11 years at its
next policy meeting in July.
Fears that rising interest rates and a slowdown in economic growth will lead to demand
destruction have gripped the energy market in recent days.
U.S. retail gasoline prices have broken records over the past few months as the national
average sits above $5 U.S. per gallon. The White House is weighing limits on fuel exports to try
to alleviate the pain at the domestic pump.
Despite the current drop, crude oil prices are still up more than 50% this year as rebounding
demand combined with disrupted trade flows following Russia’s invasion of Ukraine put
pressure on the global energy market.
