Oil prices fall as dollar rises as Fed raises rates. The Fed’s interest rate increase promotes the appreciation of the dollar. Oil is priced by the dollar. If the dollar is valuable, the price of oil will naturally fall, which will exert a certain pressure on crude oil, asphalt and other commodities.
Saudi Arabia is the world’s largest oil producer and one of the most important Allies of the United States in the Middle East. The alliance between Saudi Arabia and the United States ensures the continuation of petrodollar hegemony, so this hegemonic monopoly needs to be broken. Because international oil prices are denominated in dollars, when the dollar rises, the price of crude oil falls because you can buy more oil with the same dollar.
Crude oil bitumen is directly linked to the US dollar. The increase of the US dollar interest rate will inevitably lead to the support of buying the US dollar in the international market. More people will buy the US dollar because of the interest rate.
In short, the impact of the Federal Reserve on crude oil and asphalt prices is not simply proportional or inverse, which needs to be combined with the macroeconomic background at that time, economic cycle and other short-term factors and other comprehensive analysis. In the long term, we need to be alert to the possible impact of the Fed’s interest rate hike on commodity markets and crude oil asphalt.