Oil prices mixed amid Red Sea tension, upcoming US Fed meeting

By Zeynep Beyza Kilic

Oil benchmarks were mixed in early trade on Tuesday ahead of the release of key US Federal Reserve data and offset by ongoing tension in the Middle East and the Red Sea.

The international benchmark crude Brent traded at $83.55 per barrel at 10.34 a.m. local time (0734GMT), a 0.01% decrease from the closing price of $83.56 a barrel in the previous trading session on Monday.

The American benchmark, West Texas Intermediate (WTI), traded at the same time at $78.41 per barrel, up 0.24% from Monday's close of $78.22 per barrel.

Ongoing tension in the Middle East and the Red Sea put upward pressure on Brent on Tuesday.

On Monday, a Houthi military spokesman said they attacked two American ships in the Gulf of Aden in support of the Palestinian people facing Israeli attacks on Gaza and in response to US and UK raids on Yemen.

Early on Monday, the group also claimed to have targeted a British cargo vessel, the Rubymar, in the Gulf of Aden and downed a US military drone in Al Hudaydah in the western part of the country.

Brent climbed towards three-week highs on Tuesday, buoyed by a positive demand outlook in China, the world's second-largest economy.

An unexpected move by the People's Bank of China to reduce its five-year loan interest rate (LPR) by 25 basis points on Tuesday aided the upward push in Brent.

The rate cut, which aims to revive the real estate and loan markets against the contraction in the real estate sector while easing the burden on individuals and businesses, was the largest reduction in interest rates since the implementation of the LPR system.

The American benchmark WTI increased on Tuesday ahead of the Fed's latest Federal Open Market Committee (FOMC) meeting set for Wednesday and crude inventory data scheduled for the same day.

The minutes of the Fed meeting are expected to offer indicators regarding the central bank's future actions.