- WTI Crude Oil, the US benchmark, rises over 2% amid escalating geopolitical tensions in the Middle East.
- Attacks on ships around the Red Sea by a militant group linked to Iran, impacting Oil shipping routes, contribute to the rally.
- The recent weakening of the US Dollar after the Federal Reserve pivot, along with geopolitical risks, to underpin WTI’s price.
The US Crude Oil benchmark, also known as West Texas Intermediate (WTI), has risen more than 2% on geopolitical risks as a militant group linked to Iran continues to attack ships around the Red Sea. This has triggered a rally in WTI, exchanging hands at $73.82 due to Oil supply disruption.
WTI surges as a militant group linked to Iran continues attacks on ships in the Red Sea
Crude Oil prices extended their rally to four straight days, bolstered by a weaker US Dollar (USD) after the US Federal Reserve (Fed) ended its tightening cycle, hinting that rate cuts lie ahead in 2024. Nevertheless, an attack on Norwegian-owned vessels and Oil shipping firms avoiding the Red Sea is already impacting Oil prices.
Sources cited by Reuters said, “The rise in geopolitical risk premium, which has come in the form of regular hostilities towards commercial vessels in the Red Sea by Iran-backed Houthi rebels, plays its indisputable part in Oil's resurrection.”
Around 15% of world shipping traffic passes via the Suez Canal, the shortest shipping route between Europe and Asia.
Meanwhile, an increase in supply cushioned WTI’s rise on Monday, but Russia and Saudi Arabia, extending Crude Oil production cuts to the first quarter of 2024, are underpinning Oil prices.
WTI’s outlook remains uncertain due to the recent developments, but due to the location of daily moving averages (DMAs) above WTi’s price, could open the door for further losses. Otherwise, further escalation in the Middle East area, could lift prices and dent inflation progress worldwide.
WTI Price Analysis: Technical outlook
The daily chart portrays WTI as neutral to downward biased, but today’s jump would pave the way for a new trading range within the $72.22-$76.00 area, ahead of testing the 200-day moving average (DMA) at $77.72. On the other hand, achieving a daily close below November’s 16 latest cycle low of $72.22 could open the door to a dip to the $70.00 mark, followed by December’s swing low of $67.74.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades sideways below 1.0900 amid cautious optimism
EUR/USD trades sideways below 1.0900 in the early European session on Tuesday. The US Dollar looks to stabilize amid cautious optimism, as uncertainty over the US presidential election outcome lingers. US ISM Services PMI is also in focus, as Americans head to the polls.
GBP/USD rises toward 1.3000, awaits US election result
GBP/USD is rising toward 1.3000 in European trading on Tuesday, having found support near 1.2950 on a broadly subdued US Dollar. Traders eagerly await the outcome of the US presidential election, refraining from placing fresh bets on the major.
Gold price holds steady around $2,735 area amid modest USD slide, US election jitters
Gold price attracts dip-buyers after touching a one-week low on Tuesday and draws support from a combination of factors. Fed rate cut bets, declining US bond yields and subdued USD demand continue to act as a tailwind for the precious metal.
Crypto markets brace for volatility in tight race between Trump and Harris
The US presidential election is one of the most significant events in the world. Due to the influence of the country’s political decisions, policies, and economic approaches, it can significantly impact crypto and global markets.
US presidential election outcome: What could it mean for the US Dollar? Premium
The US Dollar has regained lost momentum against its six major rivals at the beginning of the final quarter of 2024, as tensions mount ahead of the highly anticipated United States Presidential election due on November 5.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.