Oil falls 6% on reduced risk of wider Middle East war (updated)
27/10/2024 23:36
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Brent and WTI down over $4 a barrel
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Israel hits Iranian military facilities
(Updates with settlement prices)
By Erwin Seba
HOUSTON, Oct 28 (Reuters) - Oil prices tumbled 6% on
Monday, or more than $4 a barrel, after Saturday's retaliatory
strike by Israel against Iran's military bypassed oil and
nuclear facilities, not disrupting energy supplies.
Brent futures LCOc1 settled at $71.42 a barrel, down
$4.63 or 6.09%. WTI U.S. crude futures CLc1 finished at $67.38
a barrel, $4.40 or 6.13%.
Both Brent and U.S. West Texas Intermediate crude futures
hit their lowest since Oct. 1 at the open.
"Obviously, this is a perfect example of a headline-driven
market," said Phil Flynn, senior analyst at Price Futures Group.
"We still have a lot of geopolitical risk."
Last week, the benchmarks gained 4% in volatile trade on
uncertainty over the looming U.S. election and the extent of
Israel's expected response to the Iranian missile attack of Oct.
1.
On Saturday, scores of Israeli jets completed three waves of
strikes before dawn against missile factories and other sites
near Tehran and in western Iran, the latest exchange between the
Middle Eastern rivals.
The attacks were more tailored toward military targets,
easing fears that Israel might attack Iran's nuclear facilities
or oil infrastructure.
Citi lowered its Brent price target for the next three
months to $70 a barrel from $74, factoring in a lower risk
premium in the near term, analysts led by Max Layton said in a
note.
The Organization of the Petroleum Exporting Countries and
its allies in OPEC+ kept oil output policy unchanged last month,
including a plan to start raising output from December. The
group will meet on Dec. 1 ahead of a full meeting of OPEC+.
Tudor, Pickering Holt analyst Matt Portillo said WTI could
trade much lower in the coming year.
"Absent a flare-up in the Middle East, our base case for WTI
in 2025 remains $65 a barrel, with a bias lower if OPEC+ doesn't
show significant constraint on returning volumes to the market,"
Portillo said.
Tensions remain high following the attack, however, and Iran
will "use all available tools" to respond to Israel's weekend
attack, Iranian Foreign Ministry spokesperson Esmaeil Baghaei
said on Monday.
(Reporting by Erwin Seba; Additional reporting by Arunima
Kumar, Robert Harvey in London, Florence Tan and Jeslyn Lerh in
Singapore; Editing by David Evans, David Holmes and David
Gregorio)
((erwin.seba@thomsonreuters.com; +1 832 746 4269; Reuters
Messaging: erwin.seba.thomsonreuters.com@reuters.net))