WTI holds losses around $73.00, downside seems limited due to increased supply concerns

• WTI price may regain its ground due to heightened concerns over supply disruptions in the Strait of Hormuz.

• President Trump posted on social media, calling for Iran’s “unconditional surrender.”

• The US Fed is widely expected to keep interest rates unchanged at 4.5% on Wednesday.

West Texas Intermediate (WTI) Oil price retraces its recent gains registered in the previous session, trading around $73.00 during the Asian hours on Wednesday. However, the WTI price appreciated more than 5% on Tuesday due to heightened concerns over supply disruptions in the Strait of Hormuz, which handles about one-fifth of the world’s seaborne Oil, amid escalating Middle East tensions.

On Tuesday, US President Donald Trump posted on his social media platform, calling for Iran’s “unconditional surrender.” The US military is deploying more fighter aircraft to strengthen its presence, according to three officials. Meanwhile, Israel may intensify its attacks on Iran, while the United States (US) is considering expanding its role in the conflict.

President Trump said that he wants a permanent end to Iran's route to nuclear weapons following his early departure from the G-7 meeting in Canada. However, Tehran has reportedly urged several countries, including Oman, Qatar, and Saudi Arabia, to urge US President Donald Trump to declare an immediate ceasefire.

Traders expect the US Federal Reserve to keep its benchmark overnight interest rate in the 4.25%-4.50% range at the June meeting scheduled on Wednesday, with a nearly 80% probability of a Fed rate cut each in September and October.

However, Tony Sycamore, a market analyst at IG, said that ongoing tensions in the Middle East and the risk of slowing global growth could prompt the Fed to potentially cut rates by 25 basis points in July, earlier than the current market expectation of September, per Reuters.