Oil prices muted amid demand concerns, ongoing Middle East tension

By Zeynep Beyza Kilic

Oil prices saw minimal changes on Tuesday ahead of the OPEC+ meeting scheduled later in the week, when members will determine the group’s production policy along with US data indicating economic growth.

International benchmark Brent crude traded at $82.84 per barrel at 10.12 a.m. local time (0712 GMT), a drop of 0.05% from the closing price of $82.88 per barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $78.69 per barrel at the same time, a 0.18% rise from the previous session that closed at $78.55 per barrel.

Uncertainty over the timing of the US Federal Reserve's (Fed) first interest rate cut is bolstering oil market demand concerns.

The latest data reveals that consumer confidence has partially improved in the US, the world's largest oil consumer.

There is a 50% possibility that the Fed will decrease interest rates for the first time in September, a 63% probability for November, and an 82% chance for December.

Market players will focus on the US Federal Bank's (Fed) Beige Book and economic growth data, which will be announced this week. Additionally, they will follow the Fed's inflation indicators and officials' comments to gauge the bank's future economic policy.

The world's biggest oil producers will hold a meeting on June 2. At the next meeting of OPEC+, led by Saudi Arabia and Russia, the group will discuss whether to extend voluntary output cuts of 2.2 million barrels per day into the second half of the year.

Because of low interest rates, the US dollar lost value relative to other currencies, declining by 0.12% to 104.390, while lowering the cost of oil for consumers paying in other currencies and simultaneously boosting investor demand for oil.

Meanwhile, tensions continue in the Middle East, where major oil producers and trade routes are located, to put oil prices under pressure.

Iranian-backed Houthis in Yemen announced that they targeted two US warships and three ships in the Red Sea and Indian Ocean on Monday, a day after US Central Command (CENTCOM) announced that it destroyed an unmanned aerial vehicle belonging to the Houthis in the Red Sea.

According to the Palestinian news agency WAFA, the Israeli military continues its attacks on the city of Rafah in the south of the Gaza Strip, despite calls on May 24 from the International Court of Justice (ICJ) and international pressure to halt the attacks on Rafah.

The number of people killed in Israel's attack on the camp of displaced Palestinians in the city of Rafah increased to 45 over the weekend, while a Palestinian Ministry of Health statement in Gaza announced that 249 people were injured over the same period.