Oil prices dropped over 4% on Tuesday, hitting a near two-week low, due to a weakened demand outlook and a report indicating that Israel would not target Iranian nuclear or oil sites, alleviating concerns of supply disruptions. Brent crude fell $3.21 (4.14%) to $74.25 a barrel, while West Texas Intermediate (WTI) dropped $3.25 (4.4%) to $70.58 a barrel. Both benchmarks have shed about $5 this week, nearly erasing the gains from last week when fears of Israeli retaliation against Iran drove prices higher.
Phil Flynn, an analyst at Price Futures Group, noted that this price decline reflects the unwinding of the “war premium” driven by fears of supply disruptions, rather than actual supply issues. Additionally, both OPEC and the International Energy Agency downgraded their forecasts for global oil demand growth in 2024, primarily due to slowing demand in China.