Oil Prices Fall to Two-Week Low Amid Weaker Demand and Eased Geopolitical Fears

Oil prices tumbled as much as $3 on Tuesday during Asian trading hours, hitting a near two-week low as concerns over weaker global demand overshadowed recent supply fears. Brent crude futures fell $2.81, or 3.6%, to $74.65 per barrel, after briefly touching $74.26, its lowest point since October 2. Similarly, US West Texas Intermediate (WTI) dropped $2.72, or 3.7%, to $71.11 per barrel.

The sharp decline follows a report indicating that Israel may refrain from targeting Iranian oil infrastructure, easing concerns of a significant supply disruption. Israeli Prime Minister Benjamin Netanyahu reportedly told US officials that Israel’s military response would focus on Iranian military targets rather than oil or nuclear facilities. This news helped cool the geopolitical tension that had driven oil prices higher last week.

Priyanka Sachdeva, a senior market analyst at Phillip Nova, explained, “Weakening demand has led to traders withdrawing the ‘war premium’ from prices. However, geopolitics continues to support oil at this level. Without it, oil prices could have fallen even further, possibly below $70 per barrel.”

In addition, the Organisation of the Petroleum Exporting Countries (OPEC) lowered its global oil demand forecast for 2024, with China accounting for a significant portion of the downgrade. China’s demand growth is now estimated at 580,000 barrels per day (bpd), down from 650,000 bpd, adding further pressure on prices.