Brent comes off after Fed speech signals tightening monetary policy

Front-month ICE Brent has dropped by $2.58/bbl on the day, to $99.47/bbl in the day to 08.00 CDT (13.00 GMT).

Upward pressure:

Saudi Arabia's suggestion to cut oil production in a "schizophrenic" market is gaining support among oil producers as they prepare for the next OPEC+ meeting on 5 September. New voices like Iran, Kuwait, Algeria and Venezuela have joined the chorus calling for potential cuts. OPEC president and Republic of Congo Oil Minister Bruno Jean-Richard Itoua has said that the proposal to cut output “aligns with our views and goals.”

The oil market is set to tighten rapidly as winter approaches and prices are still on track to top $120/bbl, Energy Aspects’ Amrita Sen has told Bloomberg Surveillance.

Downward pressure:

Brent values have come under pressure after US Federal Reserve Chairman Jerome Powell delivered a stern message at the Jackson Hole Symposium today. He said the Fed could likely impose more large interest hikes in coming months to curb rising inflation.

While Powell has not cited that whether Fed would announce another 75-basis point at the upcoming meeting next month. But has reiterated that the central bank would use various tools and measures to bring inflation down.

He further acknowledged that the Fed’s tightening policies will cause pain for many households and businesses in US, and that these were the “unfortunate costs of reducing inflation."

By Nithin Chandran and Konica Bhatt

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