Oil falls on strong dollar and potential Fed rate increases

Oil falls on strong dollar and potential Fed rate increases

LONDON- Oil prices fell on Monday, hit by a stronger dollar and investor concerns over the possibility of quicker than expected increases to interest rates by the U.S. Federal Reserve.

Brent crude fell 65 cents, or 0.7%, to $87.24 a barrel by 1335 GMT. U.S. West Texas Intermediate (WTI) crude dropped 84 cents, or 1%, to $84.30.

The dollar rose to a two-week high on Monday against a basket of currencies, lifted by the tension between Russia and the West over Ukraine and the possibility of a more hawkish stance from the Fed this week.

Brent had risen more than a $1 earlier in the session on concerns over tight supplies and elevated geopolitical risks in Europe and Middle East.

Further escalation of the situation in both Ukraine and the Middle East "justify a risk premium on the oil price because the countries involved – Russia and the UAE – are important members of OPEC+", said Commerzbank analyst Carsten Fritsch.

Tensions in Ukraine have been increasing for months after the Kremlin massed troops near its borders, fuelling fears of supply disruption in Eastern Europe.

The U.S. State Department announced on Sunday that it was ordering diplomats' family members to leave Ukraine.

Energy markets are likely to be