Brent and U.S. crude oil futures experienced a decline on Tuesday, driven by a perceived reduction in the risk of an expanded conflict in the Middle East. This follows Iran’s current stance of not immediately retaliating against Israel for the assassination of a Hamas official in Tehran.
As of 12:48 p.m. central time, Brent crude futures had dropped by $1.40, or 1.71%, to $80.90 a barrel. U.S. West Texas Intermediate crude also fell by $1.46, or 1.82%, to $78.60 a barrel. Phil Flynn, senior analyst at Price Futures Group, noted that the market had anticipated an imminent Iranian attack on Israel within 24 to 48 hours, but this did not materialise, leading to a decrease in the risk premium for crude.
On Monday, Brent had gained over 3%, closing at $82.30 a barrel after reaching a seven-month low of $76.30 a week earlier. The Organization of the Petroleum Exporting Countries (OPEC) reduced its 2024 demand forecast on Monday, even as it and its allies plan to increase output from October. Meanwhile, the International Energy Agency maintained its global oil demand growth forecast for 2024 but reduced its estimate for 2025, attributing this to weak Chinese consumption impacting economic growth.
The potential escalation of conflict in the Middle East poses a threat to the crude supply from this key oil-producing region. However, the likelihood of a broader war appeared diminished as Iran hinted that renewed cease-fire talks with Hamas might prevent retaliation. Jim Ritterbusch, president of Ritterbusch Associates, commented on the diminishing geopolitical risk premium.
John Kirby, White House national security spokesperson, stated on Monday that the U.S. is prepared for potential significant attacks by Iran or its proxies in the region. Additionally, markets are looking forward to the U.S. consumer price index report due on Wednesday, which will provide essential insights into inflation trends.
This report was created from an automated news agency feed without text alterations.
Frequently Asked Questions
Here are some common questions asked about this news
Why did Brent crude prices drop on Tuesday?
Reduced risk of a wider war in the Middle East led to the drop.
What was the price of Brent crude futures on Tuesday?
Brent crude futures were $80.90 a barrel.
Did Iran retaliate against Israel for the Hamas official’s assassination?
No, Iran has not acted on its threats to retaliate.
What impact did the potential conflict have on crude prices initially?
Markets had priced in an imminent attack, raising crude prices.
What is the U.S. doing in response to the tensions in the Middle East?
The U.S. is beefing up naval forces in the Mediterranean.