Global oil prices fell by more than $1 after rising to a one-month high on expectations of further escalation in the Middle East.
Points of attention
- Despite escalating tensions in the Middle East, global oil prices have fallen, reflecting the complexities of geopolitical influences on the market.
- The hostilities and threats in the region, particularly between Israel and Iran, are contributing to the uncertainty surrounding oil price dynamics.
- Analysts warn of a new global energy crisis if the conflict escalates further, emphasizing the need for careful monitoring of oil market developments.
- The recent drop in oil prices highlights the delicate balance between geopolitical tensions and market forces, affecting traders' strategies and price predictions.
- Traders are closely observing US crude oil inventories as a key indicator of potential market shifts and price fluctuations amidst the ongoing Middle East conflicts.
What is known about the drop in world oil prices
Brent futures fell $1.17, or 1.5%, to $79.76 a barrel.
U.S. West Texas Intermediate crude futures fell $1.19, or 1.6%, to settle at $75.95 a barrel.
On Monday, futures for both brands rose 3% to the highest level since late August.
How the situation in the Middle East affects oil prices
Fighting in the Middle East intensified after Iran-backed Hezbollah fired rockets at Israel's third-largest city, Haifa, and Israel appeared poised to expand its offensive into Lebanon, a year after a Hamas attack on Israel sparked Israel's war in Gaza .
The rise in oil prices began after Iran launched a missile attack on Israel on October 1. Israel has vowed to strike back and is weighing its options, with Iran's oil facilities seen as a possible target.
However, some analysts say an attack on Iran's oil infrastructure is unlikely, warning that oil prices could face significant pressure if Israel focuses on any other target.
Traders will also reportedly be watching for the latest data on US crude oil inventories.
