After rising more than 6% in the previous session, WTI oil prices edged lower in early Wednesday trading, settling just above $74 per barrel. Market concerns remain focused on the ongoing conflict between Israel and Iran, which has the potential to disrupt oil supply from the Persian Gulf. This supply risk has been a key driver behind the recent surge in oil prices. This dynamic could intensify in the event of further escalation, particularly if oil and gas exports through the Strait of Hormuz are halted. Still, considering the seriousness of the conflict, the market reaction has so far been relatively muted. One explanation may lie in prevailing forecasts of a global economic slowdown, which are weighing on oil demand expectations. Another factor in focus is US monetary policy. Today’s interest rate decision from the Federal Reserve and Jerome Powell’s subsequent public address are likely to be closely watched by oil traders. Should the central bank adopt a more cautious, dovish tone in response to recent geopolitical developments — signalling a greater willingness to cut rates — it could boost growth expectations, improve the outlook for oil demand, and offer further support to prices.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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