Brent crude oil, against which Nigerian crude oil is priced, dropped by $1.35 or 1.7% on Monday to $79.78 per barrel.
This decline comes in the wake of heightened tensions in the Middle East, as Israeli officials expressed a desire to avoid escalating the conflict in the region.
Israeli jets targeted locations in southern Lebanon on Sunday, following a deadly rocket strike in the Israeli-occupied Golan Heights, which claimed the lives of 12 children and teenagers.
While Israel has attributed the attack to the Iranian-backed Lebanese group Hezbollah, the militant organization has denied any involvement.
Two Israeli officials, speaking to Reuters, indicated that while Israel is committed to retaliating against Hezbollah, it aims to do so without inciting a broader regional conflict.
“It seems like the market has come around to the idea that – even as horrific as these episodes are – they are not likely to cause a region-wide conflict,” said John Kilduff, a partner at Again Capital in New York.
The Israeli security cabinet has authorized Prime Minister Benjamin Netanyahu’s government to determine the “manner and timing” of the response.
Despite the ongoing tensions, there has been no disruption in crude output from the Middle East, the world’s largest oil-producing region.
“Despite renewed geopolitical tensions in the Middle East, the lack of any supply disruptions limits any positive price reaction,” commented Giovanni Staunovo, an analyst at UBS.
Data released earlier this month showed a notable 11% drop in China’s total fuel oil imports in the first half of 2024, raising concerns about the broader demand outlook in the world’s largest crude importer.
Further adding to the market’s woes, news surfaced that Nigeria’s massive Dangote oil refinery is reselling cargoes of U.S. and Nigerian crude due to technical issues at the plant.
Also, markets are keeping a close watch on oil producer Venezuela, where President Nicolas Maduro has reportedly won a third term with 51% of the vote, despite multiple exit polls suggesting an opposition victory.
The U.S. had previously indicated it would “calibrate” its sanctions policy toward Venezuela depending on the election’s outcome.
