Menu

Search

  |   Economy

Menu

  |   Economy

Search

Oil Prices Rise Amid Iran-Israel Conflict and Fed Rate Speculation

Oil Prices Rise Amid Iran-Israel Conflict and Fed Rate Speculation. Source: Photo by Aron Razif

Oil prices climbed in early Wednesday trading, extending gains from the previous session as geopolitical tensions between Iran and Israel stoked fears of supply disruptions. Brent crude rose 19 cents (0.25%) to $76.64 a barrel, while U.S. West Texas Intermediate (WTI) added 23 cents (0.31%) to reach $75.07 per barrel.

The escalation of the Iran-Israel conflict, now in its sixth day, has raised alarm over potential threats to the Strait of Hormuz, a vital oil transit chokepoint responsible for about 20% of global seaborne crude. U.S. President Donald Trump demanded Iran’s “unconditional surrender,” while the Pentagon is dispatching more fighter jets to the region, signaling further military buildup.

Adding to concerns, two oil tankers collided and caught fire near the Strait, and the UK Maritime Trade Operations warned of electronic interference affecting ship navigation in the area. Iran, the third-largest OPEC producer, pumps approximately 3.3 million barrels per day. However, analysts note that other OPEC members have spare capacity to compensate for potential shortfalls.

Markets are also closely watching the Federal Reserve’s ongoing policy discussions. While the central bank is expected to maintain interest rates at 4.25%-4.50%, analysts suggest that rising oil prices and geopolitical risks could prompt a rate cut as early as July—sooner than the market's current forecast of September. Lower rates typically stimulate economic growth and boost oil demand.

Yet, the Fed faces a dilemma, as surging crude prices could fuel inflation. According to the American Petroleum Institute, U.S. crude and gasoline inventories fell last week, while distillate stocks rose, adding another layer of complexity to the outlook for energy markets and monetary policy.

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.