Oil slides more than 1% as Middle East tensions ease

Economy

8-04-2024, 11:52

INA- SOURCES

Oil prices slid more than $1 a barrel on Monday, with Brent falling below $90, as Middle East tensions eased after Israel withdrew more soldiers from southern Gaza and committed to fresh talks on a potential ceasefire in the six-month conflict.

Brent crude futures dropped $1.48, or 1.6%, to $89.69 a barrel by 0615 GMT.

U.S. West Texas Intermediate crude was at $85.54 a barrel, down $1.37, or 1.5%.

"It appears the catalyst is Israel saying it has withdrawn all troops except one brigade from the Southern Gaza strip, likely in response to growing international pressure and to deescalate tensions after it killed senior Iranian commanders in Syria last week," IG market analyst Tony Sycamore said.

Auckland-based independent analyst Tina Teng said: "This could be just a temporary pullback as the event did not offer any fundamental changes."
Israel and Hamas sent teams to Egypt for fresh talks on a potential ceasefire ahead of the Eid holidays, easing tensions in the Middle East that drove up oil prices by more than 4% last week on concerns of supply disruption.
Israeli Defence Minister Yoav Gallant said on Sunday that Israel is ready to handle any scenario that may arise with Iran, after Tehran threatened to retaliate for the killing of Iranian generals on April 1.

The world's top oil exporter, Saudi Arabia, raised official selling prices for all crude grades to Asia in May, in line with expectations, after heavy oil supply tightened.

Fire struck an offshore platform operated by Mexico's national oil company Pemex on Saturday, killing at least one contractor. This comes after Pemex requested its trading unit to cancel up to 436,000 barrels per day of crude exports in April.

However, Goldman Sachs analysts expect Brent to stay below $100 a barrel in its base case scenario that assumes already solid demand, no further geopolitical hits to oil supply and that elevated spare capacity will lead OPEC+ to raise production in the third quarter.

In the United States, oil rigs rose by two to 508 last week while gas rigs fell by two to 110, the lowest since January 2022, Baker Hughes (BKR.O), opens new tab said in its report on Friday.