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Oil prices in settle lower in volatile trade amid ongoing Middle East tensions
Oil prices settled lower in a volatile trading session on Tuesday as investors weighed ongoing Middle East that threaten supplies through the key Red Sea region and a stronger dollar amid easing expectations for sooner rather than later rate cut. At 14:30 ET (19:30 GMT), the U.S. crude futures settled 0.4% lower at $72.40 a barrel and the Brent contract fell 0.3% to $77.95 a barrel. Middle East tensions keep supply fears elevated Tensions remain elevated in the Middle East in the wake of the strikes by the United States and Britain against the Houthi group in Yemen, in retaliation for attacks by the Iran-backed group on shipping in the Red Sea. Fearing a step in attacks from the Houthi group in the Red Sea, Shell (LON:SHEL) suspended all shipments through the Red Sea indefinitely, the Wall Street Journal reported. Additionally, Iran said on Tuesday it had launched ballistic missiles at targets in Iraq and Syria in defence of its sovereignty and to counter terrorism. This followed Tehran seizing a tanker with Iraqi crude destined for Turkey on Thursday. More oil tankers are now shunning the southern Red Sea, taking a longer (and more expensive) route to Asia which is indirectly tightening the market by forcing up oil stocks on water by 35 million barrels, according to Citi analysts. Dollar strength pegs back oil The dollar stages its biggest rally since March to keep a lid on prices as Treasury yields jumped after Federal Reserve Governor Christopher Waller said there was no need for the central bank to cut rates quickly as the economy remains in good shape. "In many previous cycles [...] the FOMC cut rates reactively and did so quickly and often by large amounts," Waller said Tuesday. "[H]owever, with economic activity and labor markets in good shape and inflation coming down gradually to 2 percent, I see no reason to move as quickly or cut as rapidly as in the past," he added. A stronger dollar makes oil, priced in the U.S. dollars, more expensive for foreign buyers. That weighs on demand, which is already under pressure amid concerns about a slowdown in the global economy. Source - Investing.com
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