Oil prices fall over 2% as Fed hikes interest rates | Reuters

Oil prices fall over 2% as Fed hikes interest rates | Reuters

Oil prices fell more than $3 on Wednesday as markets worried about a fall in demand after the Federal Reserve hiked interest rate by three-quarters of a percentage point.

Brent crude futures for August settled down $2.7, or 2.2%, at $118.51 a barrel, having fallen as low as $117.75. U.S. West Texas Intermediate crude for July fell $3.62, or 3.04%, to $115.31 a barrel, after dropping to a low of $114.60.

The biggest hike by the U.S. central bank since 1994 also sent dollar higher with the dollar index rising to its highest since 2002. A stronger greenback makes U.S. dollar-priced oil more expensive for holders of other currencies, curtailing demand.

Meanwhile, U.S. crude production, which has been largely stagnant over the last few months, edged up 100,000 barrels per day last week to 12 million bpd, its highest level since April 2020, data from the Energy Information Administration showed.