Oil extended losses after a report that Israel may avoid targeting Iran’s crude infrastructure eased concerns over tensions in the Middle East.
West Texas Intermediate fell below $72 a barrel, after losing 2.3% on Monday, while Brent settled near $77. Israeli Prime Minister Benjamin Netanyahu told the Biden administration he is willing to strike military rather than oil or nuclear facilities in Iran, the Washington Post reported, citing two officials familiar with the matter.
“The reaction by the market is likely taking off or tapering the geopolitical risk premium on oil for now,” said Rohan Reddy, head of international business development & corporate strategy at Global X Management.
Crude prices have been on a roller coaster in recent weeks as traders tracked the outlook for escalating conflict in the Middle East. WTI has risen about 5% this month as the geopolitical situation threatens output from a region that supplies about a third of the world’s oil.
Futures declined on Monday after China’s highly anticipated Finance Ministry briefing over the weekend lacked specific new incentives to boost consumption in the world’s biggest crude importer. Adding to the gloom, OPEC joined a chorus of others projecting weakening demand growth, trimming its forecasts for this year and next for a third consecutive month.