Islamabad, Oct 15: Oil prices drop on easing fears over Middle East
Oil prices drop losses Tuesday came after it was reported that US President Joe Biden had been informed by Israeli Prime Minister Benjamin Netanyahu that he would not attack Iran’s nuclear or crude oil facilities in response for a missile attack that had occurred earlier this month.
The sell-off coincided with concerns about China’s economic prospects, as Beijing failed to disclose details on a range of measures announced at the end of last month, nor did it announce any new stimulus during a weekend briefing.
With the third-quarter reporting season ready to begin, equity traders were generally optimistic, driving most Asian markets higher following yet another record close for the Dow and S&P 500 on Wall Street.
After losing at least two percent on Monday, both major oil contracts fell roughly three percent in early trade after the Washington Post revealed that Netanyahu had promised to attack Iran’s military rather than its nuclear and crude oil industries.
Since Tehran fired a volley of missiles at Israel at the beginning of the month, investors have been on edge due to fears that a reaction could ignite a conflict throughout the region.
Following Tel Aviv’s establishment of a new front against Hezbollah fighters in Lebanon and its ongoing conflict with Hamas in Gaza, the commodity has seen dramatic fluctuations in recent weeks.
One day after Hezbollah’s most devastating attack on Israel since the group’s war began in late September, Netanyahu pledged on Monday to strike the organization mercilessly.
Adding to the downward pressure on oil is concern that China would struggle to reignite the world’s second-biggest economy after a much-anticipated news conference on Saturday left investors wanting.
There had been hope Finance Minister Lan Fo’an would unveil a multi-billion-dollar package of support including fiscal help to go alongside measures announced in September that largely focused on the troubled property sector.
Important data on trade, retail sales, and economic growth later in the week may offer a new perspective on the status of the nation’s finances.
According to Rodrigo Catril of National Australia Bank, “China is in desperate need of fiscal support—with very weak domestic demand alongside an economy facing deflationary pressures and softer global demand.”
Tokyo saw gains as traders returned from a three-day weekend, pushing the Nikkei 225 above 40,000 points for the first time since July. However, shares in Shanghai and Hong Kong dipped on Tuesday.
