BEIJING: Oil prices retreated in Asian trading on Tuesday following a surge of over 7% in the past three sessions, driven by supply concerns related to the ongoing Middle East conflict and the shutdown of Libyan oil fields.
Brent crude futures dropped by 32 cents, or 0.39%, to $81.11 a barrel at 0154 GMT, while U.S. West Texas Intermediate crude futures fell 36 cents, or 0.46%, to $77.06 a barrel.
The pullback comes after significant gains fueled by expectations of U.S. interest rate cuts that could boost fuel demand, weekend military clashes between Israel and Hezbollah, and the closure of Libyan oil fields. During this period, WTI prices increased by 7.6% and Brent by 7%.
“Markets remain on edge as skirmishes between Israel and Hezbollah escalate,” noted ANZ analysts. “The risk of actual oil supply disruptions has become tangible after Libya’s eastern government announced a halt in oil production and exports due to a deepening political dispute.”
The political conflict in Libya could impact up to 1.17 million barrels per day of production, according to recent OPEC data. Additionally, escalating tensions between Israel and Hezbollah, including a major missile exchange, have further supported oil prices.
A top U.S. general mentioned on Monday that while the immediate risk of a broader conflict has somewhat eased, the threat of an Iranian strike on Israel still poses a significant concern.
