WTI finds support near $85, geopolitical tensions keep oil demand intact

• The price of oil consolidates near $85.00 pending US inflation data for March.
• US inflation data will provide clues as to when the Fed might start cutting interest rates.
• Iran's direct involvement in the Gaza war and Ukraine's new attacks on Russian oil refineries could further tighten oil supplies.

West Texas Intermediate (WTI), futures on NYMEX, remains with support near $85.00 pending data on the US Consumer Price Index (CPI), which will be published at 12:30 GMT . The March inflation data will influence market expectations of whether or not the Federal Reserve (Fed) will decide on rate cuts at its June meeting.

Inflation data is expected to remain firm due to rising oil prices, rents and insurance costs and portfolio management fees.

The price of oil corrects after setting a new five-month high at $87.50. However, the escalation of tensions in the Middle East keeps oil demand intact. The Israeli ceasefire proposal does not satisfy several of Hamas's demands, but the latter has commented that it would study the proposal further and turn to mediators again. Hamas wants Israel to withdraw its forces and allow Palestinians displaced by the war in Gaza to return to their homes.

Fears of direct Iranian intervention in the Israel-Palestine war increase as the Israeli army has announced that it is ready to invade Rafah, the last resort for displaced Palestinians.

Iran's entry into the Gaza war front will significantly disrupt the oil supply chain. Iran is the third largest oil producer in OPEC, and its direct involvement in the war will significantly strain the oil market, which will have a positive impact on the price of crude oil.

In eastern Europe, Ukraine's drone attacks on Russian oil infrastructure have also kept fears of an oil supply crisis intact.