MELBOURNE– Oil prices declined in early trade on Wednesday as a result of U.S. Vice President Joe Biden’s campaign to reduce surging fuel prices, which included pressure on big U.S. companies to provide drivers during the country’s peak summer demand.
At 00:31 GMT, WTI oil futures in the United States fell $1.34, or 1.2 percent, to $108.18 per barrel, while Brent crude futures fell $1.33, or 1.2 percent, to $113.32 per barrel.
A person briefed on the proposal told Reuters that U.S. President Joe Biden is set to ask for a temporary suspension of the 18.4-cent-per-gallon federal tax on gasoline on Wednesday, as the country fights to combat rising gasoline costs and inflation. Biden said on Monday that he was evaluating whether to request a tax halt.
“Even oil traders acknowledged that higher oil prices, and consequently higher gasoline prices, would lead to a more aggressive tag-team assault by the (U.S.) Fed pushing rates higher and the Biden administration getting increasingly creative on the political and fiscal front to tame the energy inflation beast,” said Stephen Innes, managing partner of SPI Asset Management.
On Thursday, Biden will meet with seven oil corporations under pressure from the White House to reduce fuel costs despite record profits.
Michael Wirth, CEO of Chevron, stated on Tuesday that criticising the oil business was not the way to reduce petrol prices.
In a letter to Biden, Wirth said, “These measures do not help us deal with the problems we face.” Biden replied that the industry was being too sensitive.
Despite inflation concerns, demand is still on the path to pre-COVID levels, and supply is anticipated to lag demand growth, keeping the market tight, as trading giant Vitol and Exxon Mobil Corp pointed out this week.
The European oil sanctions on Russia for its invasion of Ukraine, which Moscow refers to as a “special operation,” have not yet taken effect, so the supply will continue to tighten.
“The market is still adjusting to the rising disruption of Russian oil production.” European sanctions have not yet taken effect. “In a note, analysts at ANZ Research said that the amount of Russian fuel sent to Europe has only gone down by a small amount since the crisis began.
