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19-06-2025
BEIJING: Oil prices ticked up in early trading on Wednesday after ending the previous session up more than 4% on worries that the Iran-Israel conflict could disrupt supplies.
Brent crude futures rose 19 cents, or 0.25%, to $76.64 a barrel by 0029 GMT. US West Texas Intermediate crude futures rose 23 cents, or 0.31%, to $75.07 per barrel.
US President Donald Trump on Tuesday called for Iran’s “unconditional surrender” as the Iran-Israel air war entered a sixth day.
The US military is deploying more fighter aircraft to the region to bolster its forces, three officials said on Tuesday.
Analysts said the market was largely worried about supply disruptions in the Strait of Hormuz, which carries a fifth of the world’s seaborne oil.
Two oil tankers collided near the strait and caught fire on Tuesday. The United Kingdom Maritime Trade Operations had warned on Monday that electronic interference is affecting ships’ navigation systems.
Iran is OPEC’s third-largest producer extracting about 3.3 million barrels per day (bpd) of crude oil but analysts say other members of the Organization of the Petroleum Exporting Countries could use their spare capacity to make up for a drop in Iranian output.
Markets are also looking ahead to a second day of US Federal Reserve discussions on Wednesday, in which the central bank is expected to leave its benchmark overnight interest rate in the 4.25%-4.50% range.
However, the conflict in the Middle East and the risk of slowing global growth could push the Fed to potentially cut rates by 25 basis points in July, sooner than the current market expectation of September, said Tony Sycamore, market analyst with IG.
“The situation in the Middle East could become a catalyst for the Fed to sound more dovish, as it did following the October 7, 2023, Hamas attack,” Sycamore said.
Lower interest rates generally boost economic growth and demand for oil.
Confounding the decision for the Fed, however, is that the Middle East conflict also creates a new source of inflation via surging oil prices.
US crude and gasoline stocks fell last week while distillate inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday.
Brent crude was up $1.49, or 2.03%, to $74.72 a barrel by 1315 GMT, while US West Texas Intermediate crude rose $1.28, or 1.78%, to $73.05.
Both benchmarks climbed more than 2% earlier in the day but moved lower during volatile trade before rebounding
Iran suspended part of its gas production at the South Pars field, shared with Qatar, after an Israeli strike caused a fire. Another Israeli strike targeted Iran’s Shahran oil depot.
Despite the tensions, oil flows have not been significantly disrupted and the Strait of Hormuz remains open. A collision between two oil tankers near the strait on Tuesday, amid rising electronic interference, has added to concerns for shipping activity in the region.
The International Energy Agency lowered its global oil demand forecast by 20,000 barrels per day and raised the supply forecast by 200,000 barrels per day, now expecting a supply increase of 1.8 million bpd.
Investors are also watching interest rate decisions from central banks, with the US Federal Reserve scheduled to discuss rates later in the day. (Int’l Monitoring Desk)
