Oil Prices slightly Rise due to Ukraine’s Tensions

Brent blend price, the world benchmark, slightly move up on Wednesday, as rising tension in Eastern Europe and the Middle East heightened fears of a supply shortage, while investors took profits ahead of the US Federal Reserve’s, decision on the interest rate, and US oil inventories data.

Oil prices hit their highest levels in 7-year last week, amid fears of tight supplies, due to tensions between Ukraine and Russia.

For his part, US President Joe Biden said on Tuesday he would consider imposing sanctions, personally, against President Vladimir Putin, if Moscow invaded Ukraine, as Western leaders ramped up military preparations and drew up plans to protect Europe from a potential energy supply crisis.

Concerns about the Middle East have also mounted on Monday when Yemen’s Iran-aligned Houthi movement launched a missile attack on a base in the Emirates hosting some US forces.

However, the US and Emirates’ officials said US Patriot missiles have thwarted the attack.

Brent blend futures rose 13 cents, or 0.1 percent, to $88.33 a barrel by 0730 GMT, after jumping 2.2 percent in the previous session.

US West Texas Intermediate crude futures were down 12 cents, or 0.1 percent, at $85.48 a barrel, after rising 2.8 percent on Tuesday.

The Federal Reserve wraps up its 2-day meeting later Wednesday as traders eagerly await more indications about the timing and pace of interest rate hikes, as well as how the US central bank will begin to trim its nearly $9 trillion balance sheet.

The weekly US inventory data released by the American Petroleum Institute on Tuesday evening came in line with expectations.

But sources added that the data showed a decline in US crude stocks and distillates, while gasoline stocks rose during the week ending January 21.

On the other hand, the Gold stability and Ukraine risks offset the impact of a possible US interest rate hike,

As Gold prices stabilized on Wednesday as investors held off big bets ahead of a decision on the pace of monetary policy tightening, at the US Federal Reserve FOMC’s meeting, while tensions surrounding Ukraine kept the gold price close to a 10-week high hit, in the previous session.

The Federal Reserve’s 2-day meeting to conclude later on Wednesday and federal funds futures contracts have fully absorbed the impact of a quarter-point rate hike, and three subsequent hikes during the year, a senior International Monetary Fund official commented, on Tuesday.

Although gold is a hedge against inflation and geopolitical risks, raising interest rates increases the opportunity cost of acquiring non-returnable gold.

An expected US interest rate hike could derail the economic recovery in emerging Asian economies and keep pressure on policy makers to guard against the risk of capital flight.

As for other precious metals, the price of silver in spot transactions fell 0.6 percent to $23.68 an ounce, palladium fell 0.7 percent to $2184.34 an ounce, and platinum settled at $1025.36 an ounce.