Oil Prices Drop After Biden Hints Iran Might Avoid Attacks if Cease-Fire is Achieved
Oil Prices Drop After Biden Hints Iran
President Joe Biden has suggested that if a cease-fire deal is reached in Gaza, Iran might choose not to attack Israel. However, he noted that reaching such a deal is becoming increasingly difficult.
Earlier this week, oil prices rose due to tensions between Iran and Israel. But since then, prices have fallen as concerns about reduced demand from China have affected the market. On Wednesday, oil futures declined:
- West Texas Intermediate (WTI): Closed at $76.98 per barrel, down $1.37 (1.75%). So far this year, WTI is up 7.4%.
- Brent Crude: Closed at $79.76 per barrel, down 93 cents (1.15%). Brent has gained 3.53% year to date.
- RBOB Gasoline: Fell to $2.32 per gallon, down more than 5 cents (2.26%). Gasoline prices have increased by 10.4% this year.
- Natural Gas: Rose to $2.22 per thousand cubic feet, up 7 cents (3.31%). However, natural gas prices are down 11.7% for the year.
Iran had previously promised to retaliate against Israel following the assassination of a Hamas leader in Tehran two weeks ago. In response, Israel has heightened its military readiness, and the U.S. has sent a carrier strike group and a guided-missile submarine to the region to support Israel.
New cease-fire talks are set to begin on Thursday in Qatar, but Hamas has stated it will not participate in these discussions.
On Monday, U.S. crude oil prices surged by over 4% due to rising tensions between Iran and Israel. However, prices have since decreased as concerns about weaker demand in China have affected the market.
Helima Croft, who leads global commodity strategy at RBC Capital Markets, mentioned in a research note that there is a belief in Washington that Iran is unlikely to start a regional war. Instead, it seems Iran prefers to engage in indirect conflicts through proxies. Croft also pointed out that it may be challenging for the White House to manage the situation, as a cease-fire deal in Gaza remains difficult to achieve. She noted that delaying an Iranian attack beyond this week appears uncertain.
According to data from the Energy Information Administration, U.S. crude oil inventories increased by 1.9 million barrels for the week ending August 9. Meanwhile, gasoline stocks decreased by 2.9 million barrels.
Matt Smith, the lead oil analyst for the Americas at Kpler, explained that a slight rise in demand combined with lower production has led to decreases in gasoline and diesel stocks. He also mentioned that the summer driving season is ending soon, and hurricane activity is expected to increase this month, likely peaking in early September.
