West Texas Intermediate (WTI), the US crude oil benchmark, fell below $83.00, trading around $82.80 during early Asian trading hours on Thursday, despite ongoing hostilities in the Middle East [1]. The decline is attributed to profit-taking by traders following the US Federal Reserve's decision to keep interest rates unchanged at a range of 3.5% to 3.75% during its July policy meeting on Wednesday, a move that was widely anticipated by the market [1]. Fed Chairman Kevin Warsh stated that the central bank would not provide guidance on future rate policy but emphasized the Fed's commitment to achieving its 2% inflation target [1].
Geopolitical tensions remain elevated, with renewed military escalation in the Middle East raising concerns over crude oil flows from the region. US President Donald Trump announced that the US would retaliate against Iran after a recent attack targeting a military base in Jordan [1]. The Iranian military reportedly fired ballistic missiles at a US airbase and command center in Jordan, all of which were intercepted, according to Bloomberg [1]. Additionally, the US and Saudi Arabia conducted strikes against Tehran-backed militias in Iraq, ending a pause in hostilities [1].
Further pressure on oil supply routes is emerging as Yemen’s Iran-backed Houthi rebels consider imposing fees on commercial ships passing through the Bab el-Mandeb gateway, a critical chokepoint linking the southern Red Sea with the Gulf of Aden, as reported by Reuters [1].
On the supply side, US crude oil inventories fell more than expected last week. The US Energy Information Administration (EIA) reported a decline of 7.167 million barrels for the week ending July 24, compared to a market consensus of a 2.5 million barrel drop and a previous week's increase of 2.011 million barrels [1]. Despite these bullish inventory data and geopolitical risks, WTI prices declined, suggesting that profit-taking and monetary policy developments are currently outweighing supply concerns [1].
CONCLUSION
Despite heightened geopolitical risks and a larger-than-expected drawdown in US crude inventories, WTI prices fell below $83.00 as traders booked profits following the Federal Reserve's decision to keep interest rates unchanged. The market appears to be balancing concerns over Middle East supply disruptions with monetary policy signals and recent price gains.