June 22, 2024
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OIL & GAS

Oil Prices Retreat as Middle East Tensions Ease

Oil prices dipped on Monday, influenced by a renewed focus on market fundamentals as both Israel and Iran downplayed the risk of a heightened conflict in the Middle East following Israel’s limited strike on Iran.

According to Reuters, Brent futures decreased by 67 cents, or 0.77%, to $86.62 a barrel by 0415 GMT. Meanwhile, the front-month U.S. West Texas Intermediate (WTI) crude contract for May, which expires on Monday, fell 63 cents, or 0.76%, to $82.51 a barrel, while the June contract dropped 64 cents to $81.58 a barrel.

Yeap Jun Rong, a market strategist at IG, noted, “Brent crude prices failed to retain its initial surge, with broad expectations that geopolitical tensions between Israel and Iran may fizzle off given Iran’s tamed response.”

“With that, markets continue to unwind the geopolitical risk premium tied to potential supply disruptions, which seems more unlikely at current point in time,” he added.

Tensions initially rose after explosions were heard in the Iranian city of Isfahan, attributed to an Israeli attack. However, Tehran’s subdued reaction dampened market concerns.

Additionally, a higher-than-expected build in U.S. crude inventories, revealed by Energy Information Administration data last week, further weighed on oil prices. U.S. crude inventories rose by 2.7 million barrels, nearly double analysts’ expectations.

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