WTI hovers around $77.30 after recent gains due to concerns about supply disruptions

• WTI received support over concerns about supply disruptions between Europe and Asia.
• Israeli Prime Minister Benjamin Netanyahu stated that Israel plans to launch an attack on Rafah.
• The Wafa oil field in western Libya has resumed operations after being temporarily shut down on Sunday.

The West Texas Intermediate (WTI) oil price has dipped slightly to near $77.30 per barrel during the Asian session on Tuesday. However, Crude oil prices have found support from ongoing geopolitical tensions in the Red Sea region. Specifically, the targeting of civilian shipping vessels by Iran-led Houthis has raised concerns about potential disruptions to supply lines between Europe and Asia. As a result, bids for Crude oil barrels remain elevated as market participants monitor the situation closely.

In a significant development, Israeli Prime Minister Benjamin Netanyahu has stated that Israel plans to launch an attack on Rafah, a city where hundreds of thousands of displaced Palestinians are taking shelter. However, Netanyahu noted that the assault would be postponed if a deal to release captives is reached.

US President Joe Biden also weighed in, expressing the belief that negotiators are close to an agreement that would halt Israel’s military actions in Gaza within a week, contingent on the release of at least some of the more than 100 hostages held by Hamas.

Notably, Israeli negotiators have indicated a willingness to release a group of high-profile Palestinian prisoners serving long sentences in exchange for the freedom of some Israeli hostages held in Gaza.

In a notable address on policy, Kansas City Federal Reserve Bank President Jeffrey Schmid conveyed that he shares the sentiment of many central banking counterparts in not hurrying to reduce interest rates. This stance, commonly held among policymakers, reflects a cautious approach to monetary policy changes. Typically, high borrowing costs have the effect of dampening economic growth, which leads to reduced oil demand.

The Wafa oil field in western Libya, which produces between 40,000 to 45,000 barrels per day (bpd), has resumed operations after being temporarily shut down on Sunday. This has also resulted in the restoration of a natural gas link to Italy. The halt was prompted by protests, but the demonstrators withdrew from the facilities following assurances from the government regarding the fulfillment of their demands.