Oil dropped as tensions in the Middle East eased, leading to a decline in market premiums, as per a Reuters report on Monday. Brent futures were down 55 cents to $86.74 a barrel by 10:20 GMT. Meanwhile, West Texas Intermediate (WTI) crude contract for May, which expires on Monday, dropped 33 cents to $82.81 a barrel in tepid trade. The more active June contract dipped 52 cents to $81.70 a barrel.
The situation calmed after Iran played down Israel’s reaction to its recent drone and missile strike, asserting that Israel has received an adequate response.
The US House passed new sanctions on Iran’s oil sector, with Senate approval expected to take place soon.
Additionally, the US approved further funding for Ukraine’s conflict with Russia. Despite geopolitical tensions and OPEC+ supply cuts boosting oil by 12 per cent this year, attention now turns to US economic data, particularly inflation indicators from the Federal Reserve.
Market experts anticipate modest downward pressure on oil prices amid the current geopolitical climate. However, investors remain bullish, evidenced by increased trading in oil call options.
Earnings reports from major oil companies, including TotalEnergies SE, Chevron Corp., and Exxon Mobil Corp., are awaited, along with Asian firms like Reliance Industries Ltd. and Cnooc Ltd. This quarter’s focus will be on Big Oil’s production growth as earnings stabilise.
