Oil prices slip as inflation woes outweigh possible OPEC+ output cuts

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria. REUTERS/Leonhard Foeger/File photo

Oil prices fell on Tuesday after notching their highest gains in more than a month in the previous session, as global inflation worries overshadowed the prospect of possible OPEC+ output cuts.

Brent crude futures fell 39 cents, or 0.3 percent, to $104.70 a barrel by 0012 GMT after climbing 4.1 percent on Monday. U.S. West Texas Intermediate crude was at $96.79 a barrel, down 21 cents, or 0.2 percent, following a 4.2 percent rise in the previous session.

Inflation is near double-digit territory in many of the world’s biggest economies, a level not seen in close to a half century, and investors are concerned that more aggressive interest rate hikes will follow from the United States and Europe.

Also weighing on prices, Russia’s oil output has exceeded expectations in the wake of the war in Ukraine, the head of the International Energy Agency (IEA) said on Monday. But he said that Moscow – which calls its actions in Ukraine “a special operation” – will find it increasingly difficult to uphold production as Western sanctions begin to bite.

IEA members nations could release more oil from strategic petroleum reserves (SPR) if they find it necessary when the current scheme expires, the head of the agency also said.

Saudi Arabia, top producer in the Organization of the Petroleum Exporting Countries (OPEC), last week raised the possibility of production cuts, which sources said could coincide with a boost in supply from Iran should it clinch a nuclear deal with the West.

OPEC+, comprising OPEC, Russia and allied producers, meets to set policy on Sept. 5.

Meanwhile the American Petroleum Institute, an industry group, is due to release data on U.S. crude inventories at 4:30 p.m. EDT (2030 GMT) on Tuesday. The Energy Information Administration, the statistical arm of the U.S. Department of Energy, will release its own figures at 10:30 a.m. (1430 GMT) on Wednesday.

U.S. crude oil stockpiles likely fell 600,000 barrels with distillates and gasoline inventories also seen down, a preliminary Reuters poll showed on Monday.