Oil prices declined as the anxiety-fueled surge triggered by the Israel-Hamas conflict earlier in the week started moderating.
Brent crude dropped 78 cents, or 0.89% to $86.87 a barrel while U.S. West Texas Intermediate (WTI) crude slipped by 84 cents, or 0.98% to $85.13.
These losses followed Saudi Arabia’s announcement that it was working closely with regional and international partners to prevent further escalation in the Middle East and to stabilize oil markets. The diplomatic assurance helped quell concerns of sudden supply disruptions.
PVM analyst Tamas Varga remarked, “Both WTI and Brent retreated yesterday as concerns of a sudden and unexpected supply disruption have been swept aside for now.”
Yet, lingering tensions are keeping investors cautious. Trading house Mercuria warned that oil prices could surge to $100 a barrel if the Middle East situation escalates.
Russian President Vladimir Putin reinforced OPEC+ coordination, emphasizing the need for predictability in the oil market while also urging Russian companies to prioritize the domestic market, partially easing a recent export ban on gasoline and diesel.
Beyond the oil market, attention turns to the U.S. Federal Reserve’s September policy meeting minutes for insights into future interest rate decisions.
U.S. Treasury Secretary Janet Yellen, despite acknowledging “additional concerns” stemming from the Middle East conflict, expressed optimism about the U.S. economy’s resilience.
In Europe, economic concerns persist, with the German government anticipating a 0.4% contraction this year due to high inflation, adding another layer of uncertainty to the global economic landscape.
