West Texas Intermediate (WTI) – the benchmark US Crude Oil price – regains some positive traction on Tuesday and recovers a part of the previous day’s heavy losses to the $88.75-$88.70 region, or over a two-week low.
The commodity climbs back closer to the $92.00 mark during the first half of the European session as traders keenly await further developments surrounding the Middle East crisis
The optimism over a potential US-Iran peace deal faded rather quickly following reports that US forces conducted self-defense strikes in southern Iran on Monday, targeting missile launch sites and Iranian boats attempting to emplace mines. Furthermore, Iran’s Supreme Leader, Mojtaba Khamenei, said on Tuesday that the US will no longer have a safe haven for Middle East bases and added that he invites all Islamic countries to cooperate. Meanwhile, Iran’s Islamic Revolutionary Guard Corps (IRGC) reported that it identified hostile aircraft entering its airspace and intercepted an MQ-9 drone.
The renewed military action comes on top of disagreements over Iran’s nuclear program and a standoff over the Strait of Hormuz. Adding to this, US President Donald Trump has repeatedly threatened more military action against Iran if it does not accept a broader peace deal. The latest developments keep geopolitical risks in play, offsetting reports that the US and Iran have reached a framework deal.