Oil down with interest rate hike fears triggering demand concerns

By Zeynep Beyza Kilic

Oil prices declined on Tuesday amid concerns that global central banks would keep interest rates at high levels for an extended period, leading to a decrease in global oil demand.

International benchmark crude Brent traded at $90.81 per barrel at 10.15 a.m. local time (0715 GMT), a 2.66% loss from the closing price of $93.29 a barrel in the previous trading session on Monday.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $88.62 per barrel, down 1.18% from Monday's close of $89.68 per barrel.

Oil prices have come under pressure due to concerns that banks will maintain high interest rates.

US Federal Reserve (Fed) officials signaled that interest rates will remain at high levels for longer than expected.

"If the economy is fundamentally much stronger than we realized, on the margin, that would tell me rates probably have to go a little bit higher, and then be held higher for longer to cool things off," Minneapolis Fed President Neel Kashkari said Monday.

Last week, the European Central Bank (ECB) revealed its interest rate decisions, emphasizing that banks would maintain high interest rates for a longer period of time.

ECB President Christine Lagarde said the ECB will keep interest rates at current levels as long as necessary.

International credit rating agency Moody's warned of the possibility of a US government shutdown if a bill to finance public institutions is not approved by the end of September.

A prolonged shutdown would likely be devastating for both the US economy and financial markets.