WTI Oil price trades cautiously near the two-week low around $64.00 after the Israel-Iran truce.
The truce between Israel and Iran eases risk of the closure of Strait of Hormuz.
Fed’s Powell supported to keep interest rates at their current levels amid uncertainty surrounding the Trump’s tariff policy.
West Texas Intermediate (WTI), futures on NYMEX, appears vulnerable near the two-week low around $64.00. The Oil price seems to witness more downside as the announcement of a truce between Israel and Iran has eased global supply risks.
On Tuesday, United States (US) President Donald Trump announced a ceasefire between Israel and Iran and urged them not to violate. Following the ceasefire, Israeli Prime Minister Benjamin Netanyahu warned its defence forces will respond forcefully if Iran violates the truce.
Apparently, the Israel-Iran truce eased fears of the closure of Strait of Hormuz, a passage from which almost a quarter of global Oil is supplied. The Oil price on the NYMEX rallied to near the $76 mark on Monday after Iran threatened to close the Strait of Hormuz.
Another headwind for the Oil price is comments from Federal Reserve (Fed) Chair Jerome Powell in his semi-annual testimony before the United States (US) House Financial Services Committee on Tuesday, which signaled that he might not join other officials for supporting an interest rate cut in the July policy meeting.
“We [Fed] are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance," Powell said. He guided that the central bank will closely monitor the impact of tariffs imposed by US President Donald Trump on inflation through the June and July data. Powell expressed confidence that interest rate cuts would come sooner if the central bank finds that the tariff-drive inflation is not strong enough.
Theoretically, Fed’s stance of higher-for-longer interest rates bode poorly for the Oil price.
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