Oil prices continued their downward trend on Tuesday, as investors anticipated persistent U.S. inflation, which could lead to prolonged higher interest rates, thereby dampening both consumer and industrial demand.

Brent crude futures declined by 64 cents, or 0.7%, to $83.07 a barrel by 0845 GMT. Meanwhile, U.S. West Texas Intermediate crude (WTI) slipped by 64 cents, or 0.8%, to $79.16.

The previous day, both benchmarks experienced nearly a 1% drop following statements from U.S. Federal Reserve officials indicating their reluctance to consider interest rate cuts until they see further evidence of inflation slowing down.

Analyst Toshitaka Tazawa from Fujitomi Securities attributed the selling pressure to concerns about weakening demand amid the diminishing possibility of a Fed rate cut.

Fed Vice Chair Philip Jefferson stated on Monday that it’s premature to determine if the slowdown in inflation is enduring, while Vice Chair Michael Barr emphasized the need for more time for restrictive policy measures to take effect. Atlanta Fed President Raphael Bostic also noted that it would take considerable time for the central bank to gain confidence in a sustainable slowdown in price growth.

The collective message from Fed officials indicates a likelihood of interest rates remaining elevated for a longer duration than previously anticipated, which could adversely affect economic growth and crude demand due to higher borrowing costs.

Despite political uncertainty in major oil-producing nations, such as Iran and Saudi Arabia, the oil market remained relatively stable.

Iranian President Ebrahim Raisi, a hardliner and potential successor to Supreme Leader Ayatollah Ali Khamenei, died in a helicopter crash on Sunday. Meanwhile, Saudi Arabia’s Crown Prince Mohammed Bin Salman postponed a trip to Japan due to his father’s health.

According to Vandana Hari, founder of Vanda Insights, the oil market lacks significant bullish or bearish factors to drive prices beyond the current narrow range observed since the beginning of May.

Investors are closely monitoring the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, scheduled for June 1. During this meeting, they will decide on output policy, including the potential extension of some members’ voluntary supply cuts of 2.2 million barrels per day.

Reuters reported that OPEC+ might opt to prolong voluntary cuts if demand fails to recover, according to sources familiar with the matter.