Oil drops on worries of Iranian supply return, inflation fears

Oil prices dropped for a second day on Wednesday on the possible return of Iranian supply and as investors sold on speculation that inflation worries might urge the Fed to raise interest rates, limiting economic growth. 

U.S. West Texas Intermediate crude futures fell 1.1%, or 73 cents, at $64.76 per barrel, after sliding 1.2% on Tuesday. 

Brent crude futures also lost 1.1%, or 73 cents, at $67.98 per barrel, following a 1.1% decline on Tuesday.

The U.S. Federal Reserve reiterated its commitment to keeping interest rates low through 2023, despite futures markets showing that investors believe rates may begin to climb by September 2022.

Oil prices also fell under pressure amid progress in the U.S.-Iran talks to revive a deal limiting the latter’s nuclear programme, which could result in the lifting of sanctions on Iranian oil exports.

U.S. crude inventories climbed by 620,000 barrels in the week ended May 14. Gasoline stockpile plunged by 2.8 million barrels, while distillate inventories dropped 2.6 million barrels.

The increase in crude inventories was less than analysts’ forecast for a 1.6 million barrel gain, while the drop in distillate and gasoline stocks was bigger than expected.