Before the Fed’s interest rate decision, oil prices remained flat.
Oil remained flat ahead of interest rate hikes by central banks that restrained inflation, likely to stifle demand.
U.S. crude was trading above $84 a barrel after closing near an eight-month low on Tuesday, down nearly 2 percent.
The Fed is expected to raise interest rates by 75 basis points and release new economic projections.
Other central banks from Europe to Asia will follow the Fed’s decision. These banks are also expected to increase their borrowing costs.
Charu Chanana, Market Strategist at Saxo Capital Markets, said: “If the Fed does another hawkish surprise this week, it could mean further declines for oil prices. In the medium term, as Russia-Ukraine tensions escalate, a harsh European winter could mean more gas-to-oil shifts. “Oil demand is still expected to remain strong.”
Citing the lack of investment in fossil fuels as the leading cause of the energy crisis, Saudi Aramco said that spare generation capacity in the oil market might disappear once economies recover.
Crescent Petroleum Co. CEO Majid Jafar echoed this rhetoric, saying that prices will remain high due to “chronic underinvestment” in the industry.
U.S. crude inventories increased by more than 1 million barrels last week.