Brent crude futures, the international oil benchmark, fell $4 a barrel on Tuesday as fears of supply interruptions from the conflict between Israel and Iran and a massive Gulf of Mexico hurricane eased.
Brent crude futures were down $3.57, or 4.41%, to $77.36 a barrel at 9:42 a.m. CDT (1442 GMT). U.S. West Texas Intermediate futures were down $3.68, or 4.77%, at $73.45 a barrel.
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Brent fell below $80 per barrel for the first time since August on Monday after more than a 3% day-on-day gain, following the largest weekly gain in over a year, of roughly 8%, in the week to Friday on rising concerns of a spreading war in the Middle East.
“The conflict in the Middle East is boiling over and ignites fears of escalation and oil supply disruptions. The most likely scenario is another soft shock, with oil prices rising and easing again before year-end,” said Norbert Ruecker of investment bank Julius Baer.
Hezbollah left the door open on Tuesday to a negotiated ceasefire with Israel after Israeli forces raised the stakes in the conflict with its Iran-backed enemy by making new incursions in the south of Lebanon.
Israeli defence minister Yoav Gallant said on Tuesday that it appeared that the replacement of slain Hezbollah leader Sayyed Hassan Nasrallah had also been eliminated.
The oil price rally began after Iran launched a missile barrage on Israel on Oct. 1. Israel has sworn to retaliate and said it was weighing its options, with Iran’s oil facilities considered a possible target.
Some analysts said an attack on Iranian oil infrastructure was unlikely and warned oil prices could face considerable downward pressure if Israel focuses on any other target.
“Although it would be irresponsible to claim that the dust has settled on Iran’s direct and ominous involvement in the conflict, for now the threats of Israeli assaults on Iranian oil infrastructure have not materialized yet,” said PVM analyst Tamas Varga.
In the United States, Hurricane Milton intensified into a Category 5 storm on its way to Florida after forcing at least one oil and gas platform in the Gulf of Mexico to shut on Monday.
Traders will also be looking out for the latest U.S. crude oil inventory data, with analysts expecting stocks to rise by 1.9 million barrels in the week ended Oct. 4, according to a preliminary Reuters poll.
The American Petroleum Institute is due to post its tally of U.S. stockpiles at 2030 GMT on Tuesday, followed by official data from the Energy Information Administration on Wednesday.
First Published: Oct 08 2024 | 8:56 PM IST
