Oil prices tumbled more than five per cent Tuesday after a report said Israeli Prime Minister Benjamin Netanyahu told US President Joe Biden he would not strike Iran’s crude or nuclear facilities.
Oil prices were also pushed down by worries about demand in China after Beijing failed to announce any new stimulus for its stuttering economy at a weekend briefing.
Major stock markets were mostly lower with declines in Shanghai, Hong Kong and London, while Frankfurt rose on a report showing reviving investor confidence.
However, most other Asian markets ended higher after another record close for the Dow and S&P 500 on Wall Street, with the third-quarter reporting season about to get underway.
Both main oil contracts dropped more than four percent , having lost at least two percent Monday after the Washington Post reported that Netanyahu had pledged to target Iran’s military rather than its crude and nuclear sector.
Investors have been on edge since Tehran launched a barrage of missiles at Israel at the start of the month, fuelling concerns of a response that could spark a region-wide conflict.
A key US oil contract, West Texas Intermediate, tumbled more than five per cent to $69.71 per barrel. European benchmark Brent North Sea crude also slumped by a similar amount to $73.34, before clawing back some losses.
The commodity has swung wildly in recent weeks after Tel Aviv opened a new front against Hezbollah militants in Lebanon, while also continuing its battle against Hamas in Gaza.
Netanyahu on Monday vowed to hit Hezbollah without mercy, a day after the Iran-backed group’s deadliest strike on Israel since the start of their war in late September.
If the response is “non-escalatory — (for example) tit-for-tat rockets aimed into the desert — then it looks bearish for oil,” said Neil Wilson, chief market analyst at Finalto trading group.
“If it’s a full-on strike aimed at national energy infrastructure then it would seem way more escalatory.”
A key US oil contract, West Texas Intermediate, tumbled more than five per cent to $69.71 per barrel. European benchmark Brent North Sea crude also slumped by a similar amount to $73.34, before clawing back some losses.