LONDON — Oil prices eased on Tuesday after a strong rebound over the past three sessions, driven by concerns over potential supply disruptions due to escalating Middle East conflicts and the possible shutdown of Libyan oil fields.
By 08:19 GMT, Brent crude futures had fallen 30 cents, or 0.4%, to $81.13 a barrel, while U.S. West Texas Intermediate (WTI) crude futures declined 40 cents, or 0.5%, to $77.02 a barrel.
The recent surge in oil prices, with Brent rising by 7% and WTI by 7.6% over three sessions, marked a sharp reversal from a broader downtrend observed since the market reached its 2024 peak of $91.17 per barrel in April. The downturn was largely attributed to concerns over global crude demand, especially from China, during the typically high-demand summer season.
Market participants are now adopting a wait-and-see approach following the recent price jump driven by geopolitical risks in the Middle East and the production halt in Libya,” said Yeap Jun Rong, a market strategist at IG.
In eastern Libya, nearly all of the country’s 1.17 million barrels per day (bpd) of crude production is under threat as oilfields may be closed and exports halted due to escalating tensions over the leadership of the country’s central bank, according to the region’s eastern-based administration. However, there has been no confirmation of the shutdown from the internationally recognized government in Tripoli or from the National Oil Corporation (NOC), which manages the country’s oil resources.
Additionally, oil prices have been buoyed by the intensifying conflict between Israel and Iran-backed Hezbollah. The conflict escalated following the killing of a senior Hezbollah commander last month, leading to a significant exchange of missiles between the two sides.
“Markets remain on edge as skirmishes between Israel and Hezbollah intensify,” analysts from ANZ noted in a research report.
Despite these concerns, a top U.S. general indicated on Monday that the likelihood of a broader war in the region had decreased slightly, though the risk of an Iranian strike on Israel persists.
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