Oil prices fell on Wednesday, as fears of disruption to supplies due to conflict in the Middle East receded a day after top OPEC producer Saudi Arabia pledged to help stabilize the market. Brent crude last fell $2.06, or 2.35%, to $85.59 a barrel U.S. West Texas Intermediate (WTI) crude fell by $2.48, or 2.95%, to $83.43.
Source: CNBC
Brent and WTI had surged more than $3.50 on Monday on concern the clashes between Israel and Palestinian Islamist group Hamas could escalate into a broader conflict.
Prices settled slightly lower on Tuesday after Saudi Arabia said it was working with regional and international partners to prevent an escalation, and reaffirmed it backed efforts to stabilize oil markets.
Prices continued losses into Wednesday. WTI traded $1.01 a barrel lower at its intraday trough on Wednesday.
“Both WTI and Brent retreated yesterday as concerns of a sudden and unexpected supply disruption have been swept aside for now,” PVM analyst Tamas Varga said.
Trading house Mercuria sees oil prices reaching $100 a barrel if the situation in the Middle East escalates further, deputy CEO Magid Shenouda said on Wednesday.
Russia and Saudi Arabia met in Moscow on Wednesday, when Russian president Vladimir Putin said that OPEC+ coordination will continue “for the predictability of the oil market.”
Putin also urged companies to prioritize the Russian domestic market. The country’s ban on gasoline and some diesel exports was rolled back again last week as diesel exports that arrive at ports by pipeline were permitted.
Elsewhere, investors will be looking ahead to the release of the U.S. Federal Reserve’s September policy meeting minutes due later on Wednesday for clues on future interest rate decisions.
U.S. Treasury Secretary Janet Yellen said on Wednesday that she still expected the U.S. economy to experience a soft landing, despite “additional concerns” brought about by the situation in Israel.
In Europe, the German government confirmed it expects the economy to contract by 0.4% this year because of persistently high inflation.
