Global crude oil prices fall despite political uncertainty caused by death of Iran president

Iran president Ebrahim Raisi who lost his life in a helicopter crash near its border with Azerbaijan

Global crude oil prices fell after a US Federal Reserve official suggested inflation data in the world's biggest oil consumer was not sufficiently convincing to lower borrowing costs, while the market reacted little to the political uncertainty caused by the death of oil producer Iran's president Ebrahim Raisi. 

Brent crude fell to $83.48 a barrel as US inflation data through the first months of 2024 has been disappointing, the Fed's vice-chair for supervision, Michael Barr, said, leaving the central bank short of the evidence it needs to cut interest rates. 

The price of US West Texas Intermediate crude also fell by approximately the same amount. Borrowing costs in the US have been stuck at high levels since last July in an effort to curb sticky inflation. The timing of rate cuts, which could spur economic growth and oil demand, is in sharp focus.

The market appeared unfazed, however, by political uncertainty in two major oil producing countries after Iran's president died in a helicopter crash and Saudi Arabia's crown prince deferred a trip to Japan because of the health of his father, the king.

Iranian oil policy should be unaffected by the president's sudden death because Supreme Leader Ayatollah Ali Khamenei holds ultimate power with the final say on all state matters.

Saul Kavonic, an energy analyst at MST Marquee, said the market is already accustomed to Crown Prince Mohammed Bin Salman's leadership in the energy sector. "Continuity in Saudi strategy is expected regardless of this health issue," he said.

The Organisation of the Petroleum Exporting Countries, or Opec, and its allies, together known as Opec+, are scheduled to meet on June 1.

"The market also appears increasingly numb to developments on the geopolitical front, likely due to the large amount of spare capacity Opec is sitting on," said Warren Patterson, head of commodities strategy at ING.

Data showed that Saudi Arabia's crude oil exports rose for a second consecutive month in March, reaching their highest in nine months.

In Europe, another Russian energy facility was hit. The Slavyansk oil refinery in the Krasnodar region was damaged by a weekend drone attack, state-run TASS reported, citing a company security official.

Russia has reported a rise in Ukrainian attacks on its territory since its forces opened a new front in northeastern Ukraine's Kharkiv region this month.

Reuters