Oil prices ease in early Sunday trading, slipping further from last week’s two-month peak after the United States and Iran refrained from additional military strikes in the Persian Gulf for a second consecutive day.
The September Brent crude contract fell 4.9 percent to $92.02 shortly after markets reopened, extending Friday’s 3.9 percent decline. Brent, the global benchmark, briefly touched $102 a barrel last week, about $30 above levels seen early in the month and the highest since May.
Prices had surged earlier in the month amid intensified fighting in the Middle East and concern that an escalation to full-scale conflict could further disrupt global crude supplies.
The safe passage of tankers through the Strait of Hormuz remains the oil market’s central worry following U.S. and Israeli strikes in late February, according to market participants. The narrow waterway off Iran’s coast typically carries about one-fifth of the world’s oil exports out of the Persian Gulf, and the conflict has largely stalled shipping traffic.
Producers have sought alternative routes, but those paths face risks as well. Attacks last week targeted Saudi oil tankers transiting the Red Sea.
Reduced availability of crude generally lifts prices for oil and fuels.
In the United States, the average price for a gallon of regular gasoline on Sunday was $4.11, up from $3.90 a month earlier and $3.15 a year ago, according to AAA.
Persistently high crude costs can filter through to the prices of goods moved by ship, truck, or air, including food. While the U.S. economy is still expanding, ongoing tensions with Iran have weighed on consumer sentiment.
The latest run-up in energy prices arrived as inflation had begun cooling faster than economists anticipated. Traders now see a 36 percent probability that the Federal Reserve will raise its policy rate at an upcoming meeting, based on CME Group data.
Higher rates can restrain inflation, but they also risk slowing growth by making borrowing more expensive for households and businesses. Long-term U.S. mortgage rates have climbed to their highest in nearly a year, softening the housing market.
Costlier financing could also temper the rapid build-out of artificial-intelligence data centers that has been a key driver of U.S. growth.
Despite the pullback, uncertainty in energy markets remains elevated.
Benchmark U.S. crude for September delivery dropped 5.6 percent to $84.34 on Sunday, after a 3.1 percent fall on Friday. In forward trading, October Brent, now the most active contract, slipped 4.6 percent to $87.48.
Oil prices ease amid Middle East risk
Market focus remains on potential supply disruptions in key shipping lanes and the policy response to inflation pressures.
Any renewed escalation in the region could quickly reverse the recent declines, as seen in other recent crises that rattled markets and public opinion, including events such as Trump attends dignified transfer for soldiers killed overseas.
Officials at the Federal Reserve are watching both inflation and growth indicators closely as they weigh their next move.