Oil prices rise amid US supply disruptions, anticipation of Federal Reserve rate cut

By Zeynep Beyza Kilic

Oil prices increased on Tuesday, driven by concerns over US supply disruptions following Hurricane Francine and growing expectations that the US Federal Reserve may cut interest rates.

International benchmark Brent crude rose by 0.26% to $72.94 per barrel at 10.37 a.m. local time (0737 GMT), up from the previous session's close of $72.75.

US benchmark West Texas Intermediate (WTI) increased 0.42% to $69.31 per barrel after closing at $69.02 in the prior session.

Oil prices extended their gains on Tuesday after Hurricane Francine disrupted a significant portion of US oil and gas production.

The storm, which hit the US Gulf Coast last week as a Category 2 hurricane, curtailed energy output in the Gulf of Mexico—a key region for US oil and natural gas supply.

According to the Bureau of Safety and Environmental Enforcement, about 12.18% of oil production and 16.02% of natural gas output in the Gulf remains offline as of Monday due to the storm's impact.

These production cuts are intensifying supply concerns in the market, further pushing oil prices upward.

Markets are also anticipating a possible interest rate cut by the US Federal Reserve on Wednesday, with analysts predicting a 70% chance of a 50-basis-point reduction.

Lower rates could spur economic activity and increase oil demand.

Three Democratic senators, including Elizabeth Warren, have called for an even larger 75-basis-point cut to safeguard the US economy.