WTI rises back above mid-$90.00s amid Middle East tensions and supply risks
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WTI attracts some dip-buyers on Tuesday as Iran denies that it had held talks with the US to end the war.
Reports of strikes on Iran’s gas infrastructure and the closure of the Strait of Hormuz remain supportive.
Emerging Fed rate hike bets and rising US bond yields underpin the USD, which might cap the commodity.
West Texas Intermediate (WTI) Crude Oil prices gain traction in Asian trading Tuesday, building on Monday’s rebound from the $84.00 mark, a near two-week low. The commodity climbs above the mid-$90.00s, supported by supply fears.
Iran denied it had held talks with the US to end the war, contradicting US President Donald Trump's remarks on Monday that a deal could be reached soon. Adding to this, Mohsen Rezaei, the senior military adviser to Iranian Supreme Leader Mojtaba Khamenei, said that the war will continue until Iran receives full compensation for the damage it has sustained. This raises the risk of a further escalation of the conflict in the key oil-producing region and acts as a tailwind for the black liquid.
Moreover, energy infrastructure in Iran has reportedly come under renewed pressure. According to the Iranian semi‑official Fars news agency, a gas company office and a pressure‑reduction station were hit in Iran’s central city of Isfahan. Adding to this, a projectile reportedly struck a gas pipeline feeding a power station in Khorramshahr. This comes on top of the effective closure of the Strait of Hormuz, which has led to severe disruption of energy trade and further supports Crude Oil prices.
Meanwhile, investors remain concerned that energy-driven cost pressures could revive inflation. This, along with emerging bets for an interest rate hike by the US Federal Reserve (Fed), triggers a fresh leg up in US Treasury bond yields. Adding to this, a generally weaker tone helps revive demand for the safe-haven US Dollar (USD), which tends to undermine USD-denominated commodities, and could cap gains for Crude Oil prices, warranting some caution before placing aggressive bullish bets.
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