WTI holds near daily low as Fed decision draws muted reaction

Texas Intermediate (WTI) Oil holds near its daily low on Wednesday, showing little immediate reaction to the Federal Reserve’s (Fed) monetary policy announcement. At the time of writing, WTI trades around $97.50 per barrel, down roughly 3.3% on the day.

The Fed raised the federal funds target range by 25 basis points to 3.75%-4.00% in a unanimous decision. The updated dot plot placed the median year-end rate at 4.1%, indicating that policymakers expect one more quarter-point increase this year.

Oil prices barely moved following the announcement as the rate hike was already priced in. Still, higher borrowing costs and a stronger US Dollar could weigh on economic activity and future energy demand.

Meanwhile, the market remains focused on Middle East supply risks, which continue to keep a sizeable geopolitical premium embedded in Oil prices. Shipping through the Strait of Hormuz remains heavily restricted, while security concerns around the Red Sea and the Bab el-Mandeb Strait add to the uncertainty.

Some positive news on the supply side helped drive Oil prices lower on Wednesday. Saudi Aramco is reportedly working to partially restore its East-West pipeline within days after last week’s drone attack. The route allows Saudi Oil exports to bypass the Strait of Hormuz.