Federal Reserve is scheduled to hold a one day policy meeting later Tuesday, and the oil market will be watching closely for any hint the central bank is considering stimulus measures to boost economic growth.

Asia’s strong trade and government surpluses have so far helped it absorb higher global oil prices without a significant impact on the region’s inflation and economic growth.

The cost of crude has spiked recently amid investor optimism that an improving US economy will boost demand and fears that rising tensions over Iran’s nuclear program could lead to global supply disruptions.

“Global spare capacity has been dwindling, and crude demand is about to start rising seasonally,” said Citigroup, which expects Brent to average $130 in the third quarter.

“Recent developments point to higher oil prices to come and the odds of a spike to new peaks rises.”.

Crude has jumped from $96 last month amid investor concern that growing tensions over Iran’s nuclear program could spark a military conflict that disrupts global crude supplies.

Oil has climbed this year on concern tension withIran may lead to military conflict in the Middle East, wheremore than half the world’s oil reserves are located.

Alexandra Zucchi is a business journalist based in Hobart, Australia. Alexandra has a passion for financial markets and breaking news stories and loves writing about business news, stock market, and economic opinions that matters most to its audience. Alexandra spends a lot of time discovering and researching latest financial markets and industry news stories in order to make sure the latest and greatest stories are brought to you first on BigBoardNews.com.