Brent crude futures rose 19 cents, or 0.25%, to $76.64 a barrel by 0029 GMT. U.S. West Texas Intermediate crude futures rose 23 cents, or 0.31%, to $75.07 per barrel.
U.S. President Donald Trump on Tuesday called for Iran’s “unconditional surrender” as the Iran-Israel air war entered a sixth day.
The U.S. military is deploying more fighter aircraft to the region to bolster its forces, three officials said on Tuesday.
Analysts said the market was largely worried about supply disruptions in the Strait of Hormuz, which carries a fifth of the world’s seaborne oil.
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Two oil tankers collided near the strait and caught fire on Tuesday. The United Kingdom Maritime Trade Operations had warned on Monday that electronic interference is affecting ships’ navigation systems. Iran is OPEC’s third-largest producer extracting about 3.3 million barrels per day (bpd) of crude oil, but analysts say other members of the Organization of the Petroleum Exporting Countries could use their spare capacity to make up for a drop in Iranian output. Markets are also looking ahead to a second day of U.S. Federal Reserve discussions on Wednesday, in which the central bank is expected to leave its benchmark overnight interest rate in the 4.25%-4.50% range.
However, the conflict in the Middle East and the risk of slowing global growth could push the Fed to potentially cut rates by 25 basis points in July, sooner than the current market expectation of September, said Tony Sycamore, market analyst with IG.
“The situation in the Middle East could become a catalyst for the Fed to sound more dovish, as it did following the October 7, 2023, Hamas attack,” Sycamore said.
Lower interest rates generally boost economic growth and demand for oil.
Confounding the decision for the Fed, however, is that the Middle East conflict also creates a new source of inflation via surging oil prices.
U.S. crude and gasoline stocks fell last week while distillate inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday.
