Wed. Jun 19th, 2024

Oil prices were little changed on Tuesday as investors focused on geopolitical tensions in the Middle East and optimism the U.S. Federal Reserve would soon start cutting interest rates, lifting global economic growth and fuel demand.

Brent crude futures fell 26 cents, or 0.3%, to $79.13 a barrel by 0115 GMT while U.S. West Texas Intermediate crude was at $73.59 a barrel, up 3 cents.

Trade is thin as some markets are still closed for the Boxing Day public holiday.

Both benchmarks notched gains of about 3% last week after Houthi attacks on ships disrupted global shipping and trade, adding to tensions in the Middle East as the Israel-Gaza conflict waged on.

Denmark’s Maersk (MAERSKb.CO) said on Sunday it was preparing to resume shipping operations in the Red Sea and the Gulf of Aden, citing the deployment of a U.S.-led military operation designed to ensure the safety of commerce in the area.

Shipping firms had suspended the passage of vessels through the Red Sea that connects with the Suez Canal, which handles about 12% of world trade, and imposed surcharges for re-routing ships.

Separately, Iran denied on Monday a U.S. claim that a drone launched from Iran had struck a chemical tanker in the Indian ocean.

The Pentagon said at the weekend that the Liberia-flagged, Japanese-owned and Netherlands-operated Chem Pluto ship was hit 200 nautical miles (370 km) off the coast of India.

Oil prices were also buoyed by expectations the Fed would cut interest rates next year after U.S. data released on Friday showed by some key measures inflation was now at or below the central bank’s 2% target.

Lower interest rates cut consumer borrowing costs, which can boost economic growth and demand for oil.