Oil prices rose by 2% on Wednesday as traders evaluated the durability of a ceasefire between Iran and Israel, while growing expectations of interest rate cuts in the U.S. — the world’s largest economy — also lent support to the market.
Brent crude futures climbed $1.31, or 2%, to $68.45 per barrel as of 0750 GMT, while U.S. West Texas Intermediate (WTI) crude increased by $1.24, or 1.9%, to $65.61 per barrel.
Tuesday’s close marked the lowest for Brent since June 10 and for WTI since June 5 — both before Israel launched surprise strikes on key Iranian military and nuclear sites on June 13. Oil prices had surged to five-month highs in the aftermath of those attacks.
According to OANDA senior market analyst Kelvin Wong, “geopolitical risk premiums have faded for now,” with attention shifting to monetary policy. He noted that Fed Chair Jerome Powell’s congressional testimony on Tuesday hinted at a potential interest rate cut as early as July, which could provide a demand-side boost for oil.
Wong added that technical market factors also contributed to Wednesday’s price gains.
Lower interest rates generally encourage economic growth, which can translate to increased demand for energy.
A series of U.S. economic indicators released overnight — including consumer confidence data — pointed to a potentially slower-than-expected expansion, reinforcing expectations of rate cuts this year. Futures markets are now pricing in nearly 60 basis points of easing by December.
On the geopolitical front, a preliminary U.S. intelligence assessment suggested that American airstrikes only temporarily hindered Iran’s nuclear program, failing to cause lasting damage. Meanwhile, a fragile ceasefire brokered by President Donald Trump appeared to be holding.
Earlier Tuesday, both Iran and Israel signaled a pause in their aerial conflict, following Trump’s public reprimand of both sides for breaching the ceasefire. Civilian restrictions were lifted after 12 days of fighting — during which the U.S. joined with a strike on Iran’s uranium enrichment sites — with both countries now seeking to claim strategic victory.
“Middle East supply concerns have eased for the moment, though they haven’t fully disappeared. Demand for near-term supply remains firm,” ING analysts wrote in a note to clients.
Independent analyst Tina Teng noted that oil prices are likely to stabilize in the $65–$70 per barrel range as markets await more U.S. economic data and the upcoming Federal Reserve decision.
Investors are also looking ahead to official U.S. inventory data expected later Wednesday. Preliminary figures from the American Petroleum Institute showed U.S. crude stockpiles fell by 4.23 million barrels for the week ending June 20, according to market sources.
