FIRS to launch VAT and withholding tax compliance exercise in July
By Adedapo Adesanya
Crude oil prices were down on Tuesday as the market was gripped by expectations that the US Federal Reserve would raise interest rates more than expected.
Brent crude fell $1.18 or 0.97% to trade at $121.09 a barrel while US West Texas Intermediate (WTI) crude slid $2.00 or 1.65% to sell at $118.93 a barrel.
The market expects the U.S. central bank to hike rates by 50 basis points at its meeting on Wednesday, but after surprisingly strong consumer price index (CPI) data for May, watchers market now expect a rate hike of 75 basis points.
Last week, data from the US Department of Labor released on Friday for the month of May showed consumer price inflation accelerating to 8.6%, opening the door to speculation of a an even larger rise in basis points, which lowers oil prices.
Several media reports, following an initial report in the Wall Street Journal, also flagged the possibility of a higher upside, with several top analysts, including those at institutions like JP Morgan and Goldman Sachs, speculating. are attached to them.
However, a decision will not be made until later on Wednesday.
Oil prices came under pressure following reports that the US Senate Finance Committee plans to introduce legislation establishing a 21% surtax on oil companies’ profits, which it considers excessive.
The bill would impose an additional 21% tax on the excess profits of oil and gas companies with annual revenues over $1 billion.
This has diverted attention from a tight oil market following a drop in exports from Libya amid a political crisis that has hit production and ports.
This comes as the Organization of the Petroleum Exporting Countries (OPEC) failed to increase production as agreed for the month of May.
According to OPEC’s latest monthly oil market report released on Tuesday, oil demand could be thwarted by Russia’s invasion of Ukraine.
Saudi Arabia and the United Arab Emirates are the only members with room to increase their production, but the additional production of the two Middle Eastern producers has been offset by an even greater drop in the production of Libya, Nigeria and Iraq.
Other OPEC+ producers are struggling to meet production quotas and Russia is facing bans on its oil because of the war in Ukraine.
The American Petroleum Institute (API) this week reported a rise in crude oil of 736,000 barrels, while analysts forecast a drawdown of 1.2 million barrels.
The small construction comes as the US Department of Energy released 7.7 million barrels of strategic oil reserves in the week ending June 10.
The market will await official data from the US Energy Information Administration on Wednesday for data on US crude and fuel inventories which analysts said fell 1.2 million barrels last week.