Oil slips further on report Israel won’t target Iranian crude

October 15, 2024 (MLN): Oil fell for a third session after a report that Israel may not strike Iranian oil targets, easing fears of a supply disruption.

Brent crude plunged 3.6% to $74.65 a barrel, while West Texas Intermediate crude (WTI) fell 3.8% to $71.06.

Israel said it will listen to the United States but will decide its actions according to its own national interest, Reuters quoted Prime Minister Benjamin Netanyahu's statement as saying.

That comes after the Washington Post reported that Prime Minister Benjamin Netanyahu told the Biden administration he is willing to strike military rather than oil or nuclear facilities in Iran, Bloomberg reported.

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 October 01 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.”

Brent declined 2% 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.

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