Western Texas Intermediate (WTI), the US crude oil benchmark, is currently trading around $85.18, marking its highest level since October 2023. This uptick in WTI prices is fueled by a combination of factors, including a weaker US Dollar (USD) and mounting supply concerns amidst geopolitical tensions.

The ongoing geopolitical turmoil in key regions such as the Middle East and the Russia-Ukraine conflict is exacerbating fears of supply disruptions. Recent events, including the Israeli airstrike on an Iranian embassy in Syria, Ukrainian attacks on Russian refineries, and Houthi assaults on shipping in the Red Sea, are all contributing to the apprehension about further tightening supplies, thus bolstering WTI prices.

Market attention is particularly focused on the Joint OPEC/non-OPEC Ministerial Monitoring Committee (JMMC) meeting scheduled for Wednesday. Analysts anticipate that the OPEC+ committee will opt to extend voluntary production cuts into the second quarter of the year, a decision that could further support oil prices.

Additionally, data released by the American Petroleum Institute (API) on Tuesday revealed a significant decrease in US crude oil inventories for the week ending March 29. Inventories fell by 2.286 million barrels, following a substantial 9.337 million barrel increase in the previous week, further underpinning the bullish sentiment in the market.

Moreover, WTI prices are rising as a result of the US Federal Reserve’s looser monetary policy stance. With predictions of a cumulative reduction of three quarters of a percentage point by year’s end, there is much speculation that the Fed may start cutting rates as early as its June meeting. When the USD weakens due to these expected rate cuts, holders of other currencies find dollar-denominated oil more affordable, which increases demand and drives up WTI prices.

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