Oil Extends Losses On Report Israel Won’t Target Iranian Crude

(Bloomberg) -- Oil fell for a third session after a report that Israel may avoid targeting Iran’s crude infrastructure eased concerns over a major supply disruption.

Brent futures dropped almost 3% to near $75 after losing 2% on Monday, while West Texas Intermediate slid to below $72 a barrel. Israeli Prime Minister Benjamin Netanyahu told the Biden administration he is willing to strike military rather than oil or nuclear facilities in Iran, the Washington Post reported, citing two officials familiar with the matter. 

Crude prices have been on a roller coaster in recent weeks as traders tracked an escalating conflict in the Middle East — home to about a third of global supply — after Israel vowed significant retaliation to an Oct. 1 missile barrage from Iran. That had offset concerns about slowing growth in key markets including China. 

“A scaled-back strike on Iran by Israel reduces supply risks and thus the need for a geopolitical risk premium,” said Dominic Schnider, head of global foreign-exchange and commodities at UBS Global Wealth Management. “It also brings old demand concerns to the fore.”

Futures declined on Monday after China’s highly anticipated Finance Ministry briefing over the weekend lacked specific new incentives to boost consumption in the world’s biggest crude importer. Adding to the gloom, OPEC joined a chorus of others projecting weakening demand growth, trimming its forecasts for this year and next for a third consecutive month.

Prices:

• Brent for December settlement dropped 2.6% to $75.41 a barrel at 9:05 a.m. in Singapore.

• WTI for November delivery fell 2.7% to $71.81 a barrel.