Brent hovers around $90 as inflation concerns offset Middle East tensions

Global benchmark Brent hovered around $90 a barrel on Thursday as persistent inflation dampened rate cut optimism in the short term, but stayed near six-month highs as investors braced for a potential attack on Israeli interests by Iran.

Brent crude futures were down 44 cents to $90.04 a barrel at 1321 GMT, while US West Texas Intermediate crude futures lost 58 cents to $85.63 a barrel.

It will be difficult to maintain Brent above $90 a barrel in the second half of the year without actual supply disruption associated with geopolitical events, said global energy strategist Vikas Dwivedi of Macquarie.

“As a result, we expect oil to turn bearish as the year progresses due to non-Opec supply growth, a material amount of Opec+ spare capacity re-entering the market, and the potential that continuing inflation softens demand.”

Minutes from the US Federal Reserve showed officials worried that progress on inflation might have stalled and a longer period of tight monetary policy would be needed to tame inflation in the world’s largest economy.

Investors who had earlier expected a rate cut in June now see September as a likelier timing for the easing cycle to begin, following a third straight stronger-than-forecast reading on consumer inflation.

Earlier this week, Israel and Hamas began a fresh round of negotiations in their more than six-month-old Gaza war but those talks have yielded no agreement.