Global oil prices fell on Wednesday as geopolitical tensions in the Middle East showed signs of de-escalation, while investors remained cautious about the U.S. Federal Reserve’s interest rate path.
Brent crude, the global benchmark, declined by 1.2% to $74.80 per barrel—down from $75.70 at the close of the previous session. Similarly, West Texas Intermediate (WTI) dropped 1.3%, settling at $72.64 compared to $73.60 previously.
The easing of crude prices follows renewed diplomatic efforts toward a temporary truce in the Gaza conflict. Reports from Washington indicated that the U.S. had proposed a 60-day ceasefire deal involving a prisoner swap between Israel and Hamas. Israeli sources confirmed that the proposal is under government review.
While no formal statements have been issued, early signs of progress prompted investors to scale back geopolitical risk premiums. Israeli Prime Minister Benjamin Netanyahu acknowledged “significant progress” in recent negotiations during a public briefing on June 10.
Nonetheless, volatility returned briefly after Israeli forces conducted airstrikes on June 13 targeting senior military assets and critical infrastructure—including sensitive sites—in multiple Iranian cities. The escalation triggered swift diplomatic outreach across the region.
In Cairo, Egypt’s Foreign Minister Badr Abdulati called for calm in discussions with U.S. envoy Steve Witkoff and Iran’s Foreign Minister Abbas Araghchi. Qatar’s foreign ministry, through spokesman Majid Al-Ansari, emphasized that another escalation could critically destabilize energy infrastructure.
Meanwhile, China’s Foreign Ministry spokesperson Guo Jiakun urged international actors to exercise restraint to prevent broader regional fallout.
Market sentiment also remains pressured by uncertainty surrounding U.S. monetary policy and the impact of protectionist trade measures. Analysts noted that if tensions re-escalate, oil prices could spike again, reigniting global inflation risks.
Although the Federal Reserve is expected to maintain current interest rates at its meeting, the probability of a rate cut by September has slipped to 71%, down from earlier projections. A delay in monetary easing, coupled with dollar strength, could dampen crude demand globally.
