WTI holds near daily low as Fed decision draws muted reaction

• WTI holds near its daily low after showing little reaction to the Federal Reserve’s rate increase.
• The Fed raises rates by 25 basis points, while the dot plot points to another hike this year.
• Saudi pipeline recovery hopes weigh on prices, although Middle East supply risks keep a geopolitical premium in place.

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

Oil prices barely move 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.

There were some positive supply developments earlier in the day. Saudi Aramco is reportedly working to restore about half the capacity of its damaged East-West pipeline within days. The company is also increasing crude shipments to Asian refiners through ship-to-ship transfers near Oman’s Sohar port.