Oil prices look to post a loss for the month as fears of wider Israel-Hamas war fade

An earlier version of this story referred to the wrong day of the week. The article has been corrcted.

Oil futures traded lower Tuesday afternoon, after dropping more than 3% the previous session, and remained on track for monthly losses as a risk premium tied to fears the Israel-Hamas war could threaten crude supplies eroded.

Price action Market drivers On the Middle East front, oil traders have “likely shifted into efficient market mode, waiting for signs of a definitive escalation that imperils supply before taking prices higher,” Stephen Innes, managing partner at SPI Asset Management, said in market commentary. headtopics.com

WTI has erased gains seen since the Oct. 7 attack on southern Israel by Hamas from Gaza, while Brent has significantly trimmed its gains since the start of the war despite continued risks of a wider conflict.

The biggest worry surrounds Iranian oil flows, which could see up to 1 million barrels a day of crude knocked off the market if the U.S. were to more strictly enforce sanctions on the country’s exports, said Warren Patterson and Ewa Manthey, commodity analysts at ING, in a note.“In the absence of supply disruptions from the region, it is difficult to see a significant and sustained upside in prices,” they said. headtopics.com

Still, the situation in the Middle East is fluid. Saudi Arabia’s military is on high alert after deadly clashes with Yemen’s Iran-backed Houthi rebels, who attempted to fire a missile over Saudi Arabia toward Israel, Bloomberg reported late Monday citing people familiar with the matter.

Strategists at Macquarie wrote in a recent note that they remain bearish on oil, but “recognize upside risks associated with the Middle East conflict.”

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