Oil prices dip amid Iran uncertainty, US rate jitters

Investing.com-- Oil prices edged lower in Asian trade on Tuesday, as markets were uncertain how the Iran President’s death could affect supplies, while traders feared that high U.S. interest rates will eat into demand this year. 

Iranian President Ebrahim Raisi, who was seen as a successor to Supreme Leader Ayatollah Ali Khamenei, was killed in a helicopter crash over the weekend. But traders were uncertain just what bearing his death would have on the oil-producing nation, especially as the potential for a war with Israel diminished.  

Brent oil futures expiring in July fell 0.4% to $83.38 a barrel, while West Texas Intermediate crude futures fell 0.4% $78.95 a barrel by 22:22 ET (02:22 GMT). 

Concerns over the Saudi King’s health also presented some uncertainty for markets.

US rate fears cloud demand outlook 

Fears of high-for-longer U.S. rates were a key point of pressure for crude markets, after a string of Fed officials warned of such a scenario amid sticky inflation.

High rates are expected to potentially chip away at demand, while also limiting money for investment and economic growth, which usually support oil demand. 

The minutes of the Fed’s late-April meeting are due on Wednesday and are expected to provide more cues on the rate outlook. More Fed officials- specifically members of the rate-setting committee- are also set to speak in the coming days. 

The International Energy Agency had last week trimmed its outlook for crude demand this year, citing concerns over weaker economic conditions due to pressure from interest rates. 

But the Organization of Petroleum Exporting Countries (OPEC) had maintained its demand forecast, citing strength in top exporter China. 

China has been a point of confidence for oil demand, especially as Beijing rolled out a string of stimulus measures in recent weeks to support growth. 

OPEC meeting awaited for more cues

Oil markets were also awaiting an OPEC meeting in June, where any more signals on production will be closely watched.

The cartel is expected to potentially extend its ongoing pace of production cuts past their initial June-end deadline.