WTI falls below $83.00 despite hostilities in the Middle East

• WTI price tumbles to $82.80 in Thursday’s early Asian session. 

• Fears of wider conflict in the Middle East and concerns over oil supply disruption could lift the WTI price. 

• US crude oil inventories fell by 7.167 million barrels last week, EIA said. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $82.80 during the early Asian trading hours on Thursday. WTI falls amid some profit-taking despite escalating conflicts in the Middle East. 

Traders book some profits following the US Federal Reserve (Fed) interest rate decision. The US central bank decided to keep the interest rates unchanged at a range of 3.5% to 3.75% at its July policy meeting on Thursday, as widely expected. Fed Chairman Kevin Warsh said during the press conference that while the Fed won’t provide hints on where rate policy is heading, it will take necessary steps to meet its 2% inflation target.

However, renewed military escalation in the Middle East could raise concerns over crude flows from the region and boost the WTI price. US President Donald Trump said on Wednesday that the US would strike back at Iran after a recent attack that targeted a military base in Jordan. 

The Iranian military fired ballistic missiles overnight at a US airbase and command center in Jordan, all of them intercepted, per Bloomberg. The US and Saudi Arabia also struck Tehran-backed militias in Iraq, ending a days-long pause in hostilities. 

Meanwhile, Yemen’s Iran-backed Houthi rebels are also tightening pressure on Red Sea oil flows. Reuters reported that the Houthis are considering imposing fees on commercial ships sailing through the narrow Bab el-Mandeb gateway, which links the southern Red Sea with the Gulf of Aden.  

US crude oil inventories fell more than expected last week. According to the US Energy Information Administration (EIA), crude oil stockpiles in the US for the week ending July 24 dropped by 7.167 million barrels, compared to a rise of 2.011 million barrels in the previous week. The market consensus was for a decline of 2.5 million barrels.