Oil prices fell in early Asian trade on Tuesday, with investors expecting a delay in U.S. inflation and higher interest rates to dampen consumer and industrial demand.
Brent crude futures were down 44 cents, or 0.53 percent, at $83.27 a barrel by 0313 GMT. U.S. West Texas Intermediate crude (WTI) was down 51 cents, or 0.64 percent, at $79.29 a barrel.
Both benchmarks fell less than 1% on Monday as US Federal Reserve officials said they were waiting for further signs of easing inflation before considering cutting interest rates.
"Fears of weak demand led to selling as the prospect of a Fed rate cut became more distant," said Toshitaka Tazawa, analyst at Fujitomi Securities.
Fed Vice Chair Philip Jefferson said on Monday it was too early to tell whether the slowdown in inflation was "long-lasting," while Vice Chair Michael Barr said more time was needed for restrictive policy. Atlanta Fed President Rafael Bostic said it will take "a little while" for the central bank to be convinced that the rate hike is sustainable.
Low interest rates reduce borrowing costs, freeing up funds that can boost economic growth and oil demand.
On the other hand, the market was little affected by the political uncertainty in the two major oil producing countries.
"While some uncertainty has increased in Iran, prices have since pared some of the gains, as investors have paid for the status quo in terms of policies and that any broader regional conflict is off the table,” IG market strategist Yip Jun Rong said in an email to Reuters.
Iranian President Ibrahim Raisi, a possible successor to hardline Supreme Leader Ayatollah Ali Khamenei, was killed in a helicopter crash, while Saudi Arabia's Crown Prince Mohammed bin Salman wished his father, the king, well. Because of this, the trip to Japan was postponed.
"The death of the Iranian president and the health issue of the Saudi king do not have much impact on the market, as it is unclear whether they will have an immediate impact on energy policy," said Fujitomi's Tazawa.
Investors are focusing on supplies from the Organization of the Petroleum Exporting Countries and its affiliates, known as OPEC+. They are due to meet on June 1 to set output policy, including whether to extend some members' voluntary cuts by 2.2 million barrels a day.
