Crude oil futures fell more than 4% on Tuesday as gains triggered by heightened geopolitical risks were paused as the market awaited Israel’s counterattack against Iran.
“Oil prices can only continue to rise, purely based on perceptions rather than actual supply disruptions,” Tamas Varga, an analyst at oil broker PVM, said in a note on Tuesday.
Oil prices have soared more than 7% as of Tuesday’s close since Iran fired some 180 ballistic missiles at Israel last week, raising concerns that Israel could retaliate by targeting Iran’s crude oil industry.
However, President Joe Biden has publicly discouraged Israel from attacking Iran’s oil infrastructure. Israel may first attack Iranian military and intelligence facilities, officials told the New York Times.
this jerusalem post It is also reported that Israel is expected to focus on military and intelligence facilities.
Israeli Defense Minister Yoav Galante is scheduled to meet with U.S. Defense Secretary Lloyd Austin at the Pentagon on Wednesday “to further discuss current security developments in the Middle East,” Press Secretary Maj. Gen. Pat Ryder said. tell reporters at a press conference on Monday.
Here are Tuesday’s closing energy prices:
- West Texas Intermediate Oil November contract: US$73.57 per barrel, down US$3.57, or 4.63%. U.S. crude oil prices have risen more than 2% so far this year.
- Brent December contract: US$77.18 per barrel, down US$3.75, or 4.63%. Global benchmarks have seen little change so far this year.
- RBOB gasoline November contract: $2.0681/gallon, down 3.98%. So far this year, gasoline prices are down more than 1%.
- natural gas November contract: $2.733/thousand cubic feet, down 0.47%. So far this year, natural gas leads by nearly 9%.
Manish Raj, managing director of Velandera Energy Partners, told CNBC: “War warnings in the Middle East are prompting oil tourists to flock to towns and cities to buy oil.”
“Sophisticated oil investors have seen this movie before – these are the guys who sold on the war hype and bought back when prices normalized,” Raj said.
Markets were also disappointed that Chinese officials did not announce any new stimulus package at a press conference on Tuesday.
Before the recent escalation of tensions in the Middle East, the market was swept by pessimism about weak demand from China, the world’s largest crude oil importer, and concerns that oil supply will exceed demand in 2025.
“Ongoing concerns about demand from China persist due to a lack of stimulus, while the conflict in the Middle East has not resulted in any supply disruptions,” Svetlana Tretyakova, senior oil market analyst at Rystad Energy, told CNBC.
“The price decline may also reflect profit-taking after two weeks of gains rather than purely fundamental factors,” Tretyakova said.
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