Oil prices rise amid Middle East cease-fire talks, uncertainties over US Fed rate cuts

Oil prices rise amid Middle East cease-fire talks, uncertainties over US Fed rate cuts

Israeli government officials' refusal to agree on full cease-fire lends upward oil support for oil prices by fueling supply concerns

By Duygu Alhan

Oil prices increased on Tuesday amid doubts of a full cease-fire between Israel and Hamas and ongoing uncertainties over the timing of the US Federal Reserve’s (Fed) interest rate cuts.

International benchmark Brent crude traded at $87.34 per barrel at 10.36 a.m. local time (0736 GMT), a 0.16% increase from the closing price of $87.20 per barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $82.79 per barrel at the same time, a 0.19% rise from the previous session that closed at $82.63 per barrel.

On Monday, US Secretary of State Antony Blinken joined a six-way Arab ministerial meeting in Riyadh, Saudi Arabia, to discuss the Gaza Strip cease-fire.

The meeting explored the importance of reaching an immediate and sustainable cease-fire in the region, ensuring the protection of civilians, and facilitating access to humanitarian aid to the Gaza enclave.

Following the discussions, the Israeli delegation intends to travel to Egypt to meet with Egyptian security officials to discuss cease-fire efforts in Gaza, according to Israeli media.

Although Israeli government officials are refusing to agree to a full cease-fire and are continuing their attacks in the region, Hamas is insistent on a comprehensive cease-fire in Gaza. These disagreements and the uncertainty surrounding the possibility of a full cease-fire are driving up oil prices in a region that is home to major oil trade routes and where supply risks are expected to persist.

Meanwhile, uncertainties over when the US Federal Reserve (Fed) will start interest rate cuts continue to influence oil prices.

Analysts predict that the Fed will leave the policy rate unchanged for now, but the probability of the bank starting a rate cut stands at 11% for June, 30% for July, and 58% in September.

The possibility of a rate cut would limit further price increases, as generally high interest rates boost the value of the US dollar, making oil more expensive for holders of other currencies.

The increasing value of the US dollar against other currencies also curtailed further price rises by making oil expensive for other currency holders. The US dollar index rose to 105.86, a fall of 0.27%.

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