Oil markets rallied on Tuesday, buoyed by geopolitical tensions in the Middle East and fresh pressure from former U.S. President Donald Trump on the Federal Reserve to cut interest rates. The dual catalysts raised market concerns over monetary policy independence and potential global supply disruptions.
Brent crude rose by 1.1% to $66.50 per barrel, while U.S. benchmark West Texas Intermediate (WTI) climbed 1.2% to $63.42 per barrel. The rebound followed a more than 2% drop on Monday, spurred by optimism over renewed U.S.-Iran nuclear negotiations that had temporarily eased supply concerns.
Traders on Tuesday covered short positions as Trump renewed criticism of Fed Chairman Jerome Powell, warning that the U.S. economy risks slowing unless interest rates are cut immediately. His remarks heightened concerns about political interference in monetary policy, contributing to a drop in U.S. stock indexes and pushing the dollar to a three-year low.
Analysts noted that fears over the Fed’s independence could lead to increased market volatility. A weaker dollar and potential rate cuts, however, may spur higher oil prices by stimulating broader economic activity and increasing fuel demand.
Adding to bullish sentiment, escalating tensions in Yemen also stoked supply concerns. Houthi-run Al-Masirah TV reported that U.S. warplanes had launched 25 fresh airstrikes in Yemen’s Al Hudaydah governorate, though U.S. officials have not confirmed the reports. The Houthi movement warned over the weekend that the U.S. may be preparing for a ground operation, calling it a threat to regional stability.
Since March 15, U.S. airstrikes in Yemen have reportedly killed over 200 civilians, including women and children, according to Houthi sources. The group resumed attacks on commercial shipping in the Red Sea and surrounding areas following renewed Israeli airstrikes in Gaza last month, reigniting fears of disruptions to maritime trade and global oil supply.
Last month, Trump vowed to “completely annihilate” the Houthis after ordering what he described as “decisive and powerful” military action. The conflict’s potential to impact shipping routes through the Red Sea and Bab al-Mandab Strait—key channels for global oil transport—continues to support crude prices.
Meanwhile, the U.S. Dollar Index slipped by 0.04% to 98.31, further boosting oil by making it cheaper for holders of other currencies.
With rising geopolitical risks and political pressure on U.S. monetary policy, analysts suggest that oil prices could continue to rise in the near term, especially if Fed rate cuts materialize or Middle East tensions escalate further.
