Oil prices were falling early Tuesday, giving back some gains after an initial spike in reaction to Hamas’ attack on Israel.
Brent crude, the global standard, was down 0.7% at $87.51 a barrel. West Texas Intermediate dropped 0.8% to $85.70 a barrel.
Crude prices rose around 4% on Monday as traders reacted to the prospect of further conflict in the Middle East and potential reactions from Saudi Arabia and Iran. However, the rise was relatively limited with prices not reaching the $90-a-barrel levels where they stood a week ago.
“Recently, crude has been prone to over reacting to geopolitical events and has failed to sustain initial gains as global energy markets have proven resilient, keeping markets well supplied,” said Rebecca Babin, senior energy trader at CIBC Private Wealth US.
The immediate concerns about oil supply revolve around whether the conflict jeopardizes a potential deal that would see Saudi Arabia boost production as part of diplomacy with Israel and the U.S., and whether sanctions on Iran will be tightened.
“In the short term, crude supply is very unlikely to be impacted. Nonetheless, market participants recognize that the potential for supply disruptions has increased, even if in the short-term supply is secure,” Babin said.
Write to Adam Clark at [email protected]
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