U.S. crude futures dropped over 4% after Israel reassured the U.S. about not planning to strike Iran’s oil facilities. This news eased concerns about a disruption in Middle East crude supplies. Israel intends to limit its strikes to military targets, not hitting Iran’s oil industry or nuclear facilities. Oil prices had surged earlier in response to Iran’s missile attack on Israel, sparking fears of escalation and supply disruptions. Geopolitical risks have now decreased, according to experts.
Closing energy prices showed declines across the board on Tuesday. Oil prices have retreated since the October 1 attack by Iran. However, the potential for further escalation remains a concern, with Israel possibly holding the oil card until they see Iran’s response. OPEC and the IEA have adjusted their oil demand forecasts downward, citing weakening global demand outlook, with Chinese demand dropping notably.
The IEA noted that member countries are prepared to act in case of a supply disruption in the Middle East. OPEC also has spare capacity that could be utilized in case of a disruption, with Saudi Arabia likely to proceed cautiously. Despite the surplus in the market expected next year, concerns about potential disruption in the Middle East remain, prompting caution among major oil-producing countries.
Photo credit
www.nbcnews.com