West Texas Intermediate (WTI Jumps) crude futures on NYMEX climb about 2.3% to trade near $73.00 during Tuesday’s early European session. Oil prices rally after the closure of the Strait of Hormuz – a critical maritime corridor that carries roughly 20% of the world’s crude shipments – disrupted global supply flows and intensified fears of tighter availability.
Late Monday, Iran’s Revolutionary Guard announced the shutdown of the Strait of Hormuz and warned that its forces would target any vessel attempting to pass through, according to Reuters.
Tehran has stepped up military operations around the strategic waterway in response to recent US airstrikes that reportedly killed several senior Iranian officials, including Supreme Leader Ayatollah Ali Khamenei. The escalating confrontation has heightened geopolitical risks in the region, supporting crude prices.
At the same time, US forces stated they had destroyed key command centers of Iran’s Revolutionary Guards, along with air defense systems and missile launch facilities. The strikes are said to have significantly weakened Iran’s offensive capabilities and may increase pressure on Tehran to seek de-escalation.
Looking ahead, shifting expectations around US monetary policy could influence the near-term oil demand outlook. Market participants are reassessing the likelihood of a dovish stance from the Federal Reserve at its June meeting.
Data from the CME FedWatch Tool show that the probability of the Fed keeping interest rates unchanged in June has risen to 53.5%, up from 42.7% on Friday.
Dovish expectations eased after the release of the US ISM Manufacturing PMI report on Monday. The Prices Paid component, a key gauge of input inflation at the factory level, surged to 70.5, well above forecasts of 59.5 and the previous reading of 59.0, signaling persistent inflationary pressures.
