Oil falls over 1% ahead of US Fed rate decision

Oil prices fell on Monday ahead of a US Federal Reserve meeting as investors tried to gauge the central bank’s appetite for further rate hikes, while concerns about China’s fuel demand growth and rising Russian crude supply weighed on the market.

Brent crude futures fell 89 cents, or 1.19%, to $73.90 a barrel by 6:23 a.m (GMT). US West Texas Intermediate crude was at $69.33 a barrel, also down 1.20%.

Both benchmarks notched their second straight weekly decline last week as disappointing China economic data raised concerns about demand growth in the world’s largest crude importer, offsetting a boost in prices from Saudi Arabia pledging to cut production by 1 million barrels per day in July.

The Fed’s rate hikes have strengthened the greenback, making dollar-denominated commodities more expensive for holders of other currencies and weighing on prices.

Most market participants expect the US central bank to leave interest rates unchanged when it concludes its two-day monetary policy meeting on Wednesday.

Pakistan’s Prime Minister Shehbaz Sharif on Sunday said the first cargo of discounted Russian crude oil arranged under a new deal struck between Islamabad and Moscow had arrived in Karachi.

“Glad to announce that the first Russian discounted crude oil cargo has arrived in Karachi and will begin oil discharge tomorrow,” Sharif tweeted.

“This is the first-ever Russian oil cargo to Pakistan and the beginning of a new relationship between Pakistan and the Russian Federation,” he added.

Pakistan’s purchase gives Russia a new outlet, adding to Moscow’s growing sales to India and China, as it redirects oil from Western markets because of the Ukraine conflict.

There has been no confirmation of how payment would be made, but Pakistan recently announced a plan to allow barter trade with Russia, Afghanistan and Iran.