WTI rises towards $77.00 on escalated Middle East tension, Houthi strikes at a ship

West Texas Intermediate (WTI) oil price extends its winning streak initiated on February 5, buoyed by heightened geopolitical tension in the Middle East. The price of Crude oil climbs towards $77.00 per barrel during the Asian session on Tuesday. Yemen’s Houthi rebels reportedly launched missiles at a ship headed for a port in Iran, resulting in minor damage to the vessel but no injuries to its crew, according to authorities.

Israel concluded a series of airstrikes in the southern Gaza city of Rafah on Monday. Israeli Prime Minister Benjamin Netanyahu stated his intention on Sunday to escalate military operations in Rafah following the rejection of a ceasefire proposal from Hamas.

However, US President Joe Biden warned Netanyahu against launching a ground offensive in Rafah without a "credible and executable" plan to ensure the safety of the civilians there. Hamas also cautioned Israel, stating that a ground incursion in Rafah could jeopardize future hostage releases. However, Diplomatic discussions in Beirut indicated potential progress towards reducing tensions between Israel and Hamas.

Higher interest rates contribute to uncertainty regarding demand, which in turn limits the rise in Crude oil prices. The Federal Reserve (Fed) is expected to refrain from cutting interest rates at the March meeting due to concerns about inflationary pressures. Additionally, turbulence in the Chinese economy could have an impact on oil prices, given that China is the largest oil importer.

According to the US Energy Information Administration (EIA), oil output from the top shale-producing regions in the United States is projected to increase by nearly 20,000 barrels per day (bpd) to 9.7 million bpd in March, reaching its highest level in four months.

Traders will closely monitor the OPEC Monthly Oil Market Report (MOMR), scheduled for publication on Tuesday. This report addresses significant issues affecting the global oil market and provides insights into developments in the crude oil market.