Oil nudges higher as investors eye Middle East tensions, US rate cut. Tuesday saw a slight increase in the price of oil as investors focused their attention on geopolitical issues in the Middle East and expressed confidence that the Federal Reserve of the United States would soon begin reducing interest rates, which would boost global economic growth and fuel demand.

As of 07:32 GMT, the price of a barrel of Brent oil futures had increased by 26 cents, or 0.3%, to $79.33, while the price of a barrel of West Texas Intermediate crude in the United States had increased by 16 cents or 0.2%.

The public holiday of Boxing Day has caused specific marketplaces to remain closed, which has resulted in a lack of trade.

Even though Maersk’s declaration of the restart of shipping routes through the canal has soothed supply concerns to a certain extent, the recent rise in oil prices may be attributed to the anticipation of interest rate reduction and the confrontation in the Red Sea, according to Leon Li, an analyst at CMC Market.

During the previous week, both benchmarks recorded increases of almost three percent. This was because Houthi attacks on ships caused disruptions in global commerce and trade, which added to the tensions in the Middle East as the Israel-Gaza war continued.

On Sunday, the Danish shipping company Maersk (Maersk. CO) said it was ready to restart its activities in the Red Sea and the Gulf of Aden. The company cited deploying a military operation under American command to guarantee the security of commercial activity in the surrounding areas.

Shipping companies had stopped allowing ships to pass through the Red Sea to access the Suez Canal, responsible for about 12% of global trade, and had imposed fees on ships that changed their routes.

On the other hand, Iran refuted an allegation made by the United States on Monday that a drone that had been fired from Iran had hit a chemical ship that was located in the Indian Ocean.

According to a statement released by the Pentagon over the weekend, the Chem Pluto ship, which was operating in the Netherlands and under the flag of Liberia, was struck around 200 nautical miles (370 kilometers) off the coast of India.

Following the publication of statistics from the United States on Friday, which indicated that inflation was now at or below the central bank’s objective of 2%, oil prices were also supported by the anticipation that the Federal Reserve would continue to reduce interest rates in the next year.

Low-interest rates reduce the amount of money consumers have to borrow, stimulating economic development and increasing oil demand.