NEW YORK- Oil prices declined an estimated 1% gain on Tuesday, losing some recent earnings as the possibility of immediate supply disturbance after US military forces killed top Iranian commander dampened investors’ sentiments.
Brent crude LCOc1 sunk down 64 cents, equivalent to 0.93% or $68.27 per barrel. US West Texas Intermediate (WTI) crude CLc1 declined 57 cents, equivalent to 0.9% or $62.70 per barrel.
Oil prices recorded series of highs from previous sessions brought by heightened level of fear on Middle East crisis and on the possibility of supply disruptions. Such followed after US forces killed Iran’s top commander, Qassem Soleimani on Jan. 3 as Iran promised retaliation. Brent hit its ceiling level since September as WTI recorded strong data since April.
“The expansion in geo-risk premium related to Iran appears to be running out of steam as the complex seems to be taking a ‘wait and see’ attitude ahead of possible Iranian retaliation to last week’s events,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Chevron Corp (CVX.N) Chief Executive Michael Wirth disclosed that oil markets will still be properly supplied despite the emergence of Middle East tensions.
“Fundamentally supply and demand remain where they were before these incidents,” Wirth said.
Consultancy Eurasia Group stated that Iran forces are more likely to focus US military rather than on energy targets.
“That’s not to say it won’t continue low-level harassment of commercial shipping or regional energy infrastructure, but these activities will not be severe,” the company added.
In line, the United States Maritime Administration yet again released a warning regarding the possibility of Iran and its allies attacking US commercial vessels in the Gulf and vicinity.
Oil underperformed despite intensive compliance on reduction of oil outputs conducted by the Organization of the Petroleum Exporting Countries.