Oil prices fall after US Fed chair warns of economic pain ahead

Oil prices fell on Friday, after the head of the U.S. Federal Reserve warned there is no quick cure for inflation, while talk of a hefty European Central Bank rate hike also stoked demand worries.

The U.S. economy will need tight monetary policy "for some time" before inflation is under control, a fact that means slower growth, a weaker job market and "some pain" for households and businesses, U.S. Federal Reserve Chair Jerome Powell said.

Oil futures, along with Wall Street's main stock indexes, fell after the remarks.

"The market is taking (Powell) at his word," said Phil Flynn, an analyst at Price Futures group in Chicago. "The stock market has given up its gains and I think oil was very concerned about it."

Brent Crude futures declined 51 cents to $98.83 a barrel by 11:01 a.m. EDT (1501 GMT). U.S. West Texas Intermediate (WTI) crude futures fell 86 cents to $91.66 a barrel.

Earlier in the session, both contracts had risen by over $1, supported by strong U.S. economic data a day earlier.

Overall, Brent was on track for a weekly gain of around 2.2%, while WTI was set to rise 0.8%.

Some European Central Bank policymakers want to discuss a 75 basis point interest rate hike at a Sept. 8 policy meeting, even if recession risks loom, as the inflation outlook is deteriorating, five sources with direct knowledge of the process told Reuters.

Price losses were limited as OPEC's de facto leader Saudi Arabia on Monday flagged the possibility of production cuts to offset the return of Iranian barrels to oil markets should Tehran clinch a nuclear deal with the West.

On Friday, the United Arab Emirates became the latest OPEC+ member to state it is aligned with Saudi Arabia's thinking on crude markets, a source with knowledge of the matter told Reuters.

"The impression remains that Saudi Arabia is not willing to tolerate any price slide below $90. Speculators could view this as an invitation to bet on further price rises without the need to fear any more pronounced price declines," Commerzbank said in a note.