Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Singapore — Oil prices eased on Tuesday after rallying more than 4% in the previous session, with traders cautious as they keep tabs on potential supply disruptions amid military clashes between Israel and the Palestinian Islamist group Hamas.
Brent crude fell 30c, or 0.3%, to $87.85 a barrel by 3.30am GMT, while US West Texas Intermediate crude eased 31c, or 0.4%, to $86.07 a barrel.
Both benchmarks surged more than $3.50 on Monday as the clashes raised fears that the conflict could spread beyond Gaza into the oil-rich region. Hamas launched the largest military assault on Israel in decades on Saturday, while fighting continued into the night on Monday as Israel retaliated with a wave of air strikes on Gaza.
"There is still plenty of uncertainty across markets following the attacks in Israel over the weekend," said ING analysts on Tuesday, adding that oil markets are now pricing in a risk premium.
"If reports of Iran’s involvement turn out to be true, this would provide another boost to prices, as we would expect to see the US enforcing oil sanctions against Iran more strictly. That would further tighten an already tight market," the ING analysts said.
While Israel produces very little crude oil, markets worried that if the conflict escalates it could hurt Middle East supply and worsen an expected deficit for the rest of the year. Israel’s port of Ashkelon and its oil terminal have been shut in the wake of the conflict, sources said on Monday.
Iran is complicit even though the US has no intelligence or evidence that points to Iran’s direct participation in the attacks, a White House spokesperson said on Monday.
"If the US finds evidence directly implicating Iran, then the immediate reduction in Iran’s oil exports becomes a reality," said Vivek Dhar, an energy analyst at CBA.
"We continue to believe that Brent oil will ultimately stabilise between $90-$100 a barrel in Q4 2023," said Dhar, adding that the Palestine-Israel conflict raises the risk of Brent futures tracking at $100 a barrel and above.
In a more positive sign for supply, Venezuela and the US have progressed in talks that could provide sanctions relief to Caracas by allowing at least one additional foreign oil firm to take Venezuelan crude oil under some conditions.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil dips as market eyes Middle East turmoil
Traders watch for potential supply disruptions
Singapore — Oil prices eased on Tuesday after rallying more than 4% in the previous session, with traders cautious as they keep tabs on potential supply disruptions amid military clashes between Israel and the Palestinian Islamist group Hamas.
Brent crude fell 30c, or 0.3%, to $87.85 a barrel by 3.30am GMT, while US West Texas Intermediate crude eased 31c, or 0.4%, to $86.07 a barrel.
Both benchmarks surged more than $3.50 on Monday as the clashes raised fears that the conflict could spread beyond Gaza into the oil-rich region. Hamas launched the largest military assault on Israel in decades on Saturday, while fighting continued into the night on Monday as Israel retaliated with a wave of air strikes on Gaza.
"There is still plenty of uncertainty across markets following the attacks in Israel over the weekend," said ING analysts on Tuesday, adding that oil markets are now pricing in a risk premium.
"If reports of Iran’s involvement turn out to be true, this would provide another boost to prices, as we would expect to see the US enforcing oil sanctions against Iran more strictly. That would further tighten an already tight market," the ING analysts said.
While Israel produces very little crude oil, markets worried that if the conflict escalates it could hurt Middle East supply and worsen an expected deficit for the rest of the year. Israel’s port of Ashkelon and its oil terminal have been shut in the wake of the conflict, sources said on Monday.
Iran is complicit even though the US has no intelligence or evidence that points to Iran’s direct participation in the attacks, a White House spokesperson said on Monday.
"If the US finds evidence directly implicating Iran, then the immediate reduction in Iran’s oil exports becomes a reality," said Vivek Dhar, an energy analyst at CBA.
"We continue to believe that Brent oil will ultimately stabilise between $90-$100 a barrel in Q4 2023," said Dhar, adding that the Palestine-Israel conflict raises the risk of Brent futures tracking at $100 a barrel and above.
In a more positive sign for supply, Venezuela and the US have progressed in talks that could provide sanctions relief to Caracas by allowing at least one additional foreign oil firm to take Venezuelan crude oil under some conditions.
Reuters
Gold rises further on gains fuelled by Middle East conflict
Shares in Asia shares get boost from dovish Fed comments
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
MARKET WRAP: JSE, rand cautious amid Middle East tensions
Bank of Israel to sell up to $30bn of forex to shore up shekel
WATCH: Middle East tensions spook investors
Israel-Hamas clashes lift bonds, hurt global stocks
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.