Oil Rallies as Trump Moves to Influence Rates Cut
The oil market rallied on Tuesday as U.S. President Donald Trump moved to influence the Federal Reserve’s rates cut decision in a fast and furious manner, with analysts saying this could cast doubt on the independence of the monetary policy.
Prices of crude oil was also supported by mounting concerns over potential trade disruptions triggered by ongoing US airstrikes in Yemen in addition to intensified criticism by Trump toward Federal Reserve (Fed) Chairman Jerome Powell.
Oil prices climbed in early trade on Tuesday as investors took advantage of the previous day’s losses to cover short positions, although concerns persisted over economic headwinds from tariffs and U.S. monetary policy that could dampen fuel demand.
Brent crude rose by around 1.1%, trading at $66.50 per barrel, up from $65.77 at the previous session’s close. US benchmark West Texas Intermediate increased by about 1.2%, reaching at $63.42 per barrel, compared to its prior session close of $62.64.
Both benchmarks dropped more than 2% on Monday on signs of progress in nuclear deal talks between the U.S. and Iran, helping ease supply concerns. On Monday, U.S. Trump repeated his criticism of Federal Reserve Chair Jerome Powell and said the U.S. economy could slow unless interest rates were lowered immediately.
His comments about Powell fueled worries about the Fed’s independence in setting monetary policy and about the outlook for U.S. assets. Major U.S. stock indexes dropped and the dollar index slid to a three-year low on Monday.
The Houthi-run Al-Masirah TV channel reported on Monday that US warplanes had launched fresh airstrikes in the country. Although no specific details were provided about casualties or targets, the outlet claimed that 25 airstrikes had hit the At Tuhayta District in Yemen’s Al Hudaydah governorate since Monday morning.
The US has not officially commented on the reports. On Sunday, the Houthi movement warned that the US was preparing for a ground operation in Yemen, cautioning that such action ‘threatens to fully destabilize the situation.’
Since March 15, the US has conducted hundreds of airstrikes in Yemen, resulting in the deaths of 217 civilians and injuries to 436 others—mostly women and children—according to Houthi sources, which do not include casualties among their own forces.
Last month, Trump stated he had ordered ‘decisive and powerful military action’ against the Houthis and later vowed to ‘completely annihilate them.’ The Houthis have been targeting commercial vessels in the Red Sea, the Bab al-Mandab Strait, the Gulf of Aden, and the Arabian Sea since November 2023.
Attacks were temporarily halted following a January ceasefire in Gaza but resumed after Israel renewed airstrikes on the enclave last month. The renewed threat to maritime security in the Red Sea is intensifying fears of disruptions in global oil supply, lending support to rising oil prices.
Meanwhile, Trump’s ongoing pressure on Fed Chair Powell to lower interest rates has also contributed to upward momentum in oil prices by raising concerns about the Fed’s independence. Trump warned that the US economy could slow unless ‘Mr. Too Late, a major loser, lowers interest rates.’
While concerns about the central bank’s independence persist, analysts note that lower interest rates—along with a weaker dollar and heightened economic activity—could push oil prices higher in the coming months.
The US Dollar Index, which tracks the greenback against a basket of major currencies, declined by 0.04% to 98.31, further supporting the rise in oil prices. #Oil Rallies as Trump Moves to Influence Rates Cut US Dollar Slides as Trade Tensions Cloud Sentiment
