According to Reuters, oil prices are declining due to concerns surrounding the upcoming vote on raising the US debt ceiling in the House of Representatives. The price of Brent crude oil dropped by 4.2% to $73.82, marking its lowest level since May 4. However, the decline in Brent’s price slightly slowed down as it traded at $74.21 (-3.7%).

On May 30, the House of Representatives Committee on Procedures will review a bill aimed at raising the US debt ceiling, after which the document will be put to a vote by lawmakers. The Republicans, who hold the majority in the House, have opposed raising the limit without implementing budget spending limits, as proposed by the Biden administration. Eventually, President Biden and House Speaker Kevin McCarthy reached an agreement. However, some far-right Republicans have stated that they will oppose the bill during the vote, as mentioned by Reuters.

If the national debt ceiling is not raised, the US will face default on June 5. PVM Oil analyst Tamas Varga told Reuters that this would have catastrophic economic consequences in the US and worldwide, negatively impacting oil demand. The deadline for raising the US debt ceiling nearly coincides with the OPEC+ meeting in Vienna on June 4. The oil market is also affected by uncertainty regarding whether cartel members will increase production cuts in light of falling prices.

Earlier we reported that the global central banks have started buying gold in droves due to the weakening power of the dollar.