WTI rebounds from two-week low, well bid around mid-$81.00s amid Iran risks
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WTI catches aggressive bets in reaction to Iran’s ballistic missile attacks on US forces.
Trump warned that military operations could resume if negotiations with Iran collapse.
Supply disruption worries remain in play and lend additional support to crude oil prices.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – gains strong positive traction during the Asian session on Wednesday, snapping a three-day losing streak to an over two-week low touched the previous day. The commodity currently trades around mid-$81.00s, up nearly 4% for the day, amid the risk of resumption of US-Iran hostilities.
In the latest developments surrounding the Middle East crisis, Iran's Islamic Revolutionary Guard Corps (IRGC) launched multiple ballistic missiles at US forces in the Middle East on Tuesday. Meanwhile, US President Donald Trump reiterated a warning that military operations could resume if negotiations with Iran collapse. Speaking to Fox News, Trump said that the US will target key Iranian infrastructure, major bridges, and power plants if Tehran fails to reach an agreement.
Separately, Central Command said the US military and Saudi Arabian forces conducted joint strikes “against Iran-aligned terrorists” in Iraq. This marks a fresh escalation of tensions in the region, which, along with the US-Iran standoff over the Strait of Hormuz, prompts traders to price in a geopolitical risk premium and triggers a goodish recovery in crude oil prices. In fact, shipping traffic through the strategic waterway fell sharply after Iran targeted several vessels earlier this month.
Adding to this, the Iran-backed Houthis recently opened a new front in the five-month-old US-Iran war and announced a naval blockade on Saudi Arabia in the Red Sea. This adds to market concerns about significant disruptions to global oil supplies and turns out to be another factor supporting crude oil prices. Moreover, a softer US Dollar (USD) offers some support to USD-denominated commodities and backs the case for additional gains as the focus remains on the FOMC policy decision.
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