Oil retreats amid strong EU data and lingering Mideast tensions
Oil prices experienced a decline on Tuesday, relinquishing gains sparked by robust economic data from Europe. This retreat came as market participants contemplated the possible implications of renewed U.S. sanctions targeting Iran’s oil exports.
Global benchmark Brent crude oil futures fell by 51 cents, or 0.6%, to $86.49 a barrel by 1141 GMT, while U.S. West Texas Intermediate crude futures declined by 56 cents, or 0.7%, to $81.34.
Both benchmarks had surged $1 earlier following data revealing that overall business activity in the eurozone grew at its quickest pace in nearly a year this month. This expansion was driven by a robust recovery in the bloc’s dominant service sector.
EU foreign ministers reached a preliminary agreement on Monday to broaden sanctions against Iran in response to Tehran’s missile and drone strike on Israel earlier this month.
The U.S. Senate is set to deliberate on a foreign aid bill that encompasses sanctions targeting Iran’s oil exports, aiming at vessels, ports, and refineries involved in processing Iranian oil.
John Evans from oil broker PVM noted that in a calm market, not influenced by speculation about a direct conflict between Israel and Iran, sanctions would likely be more manageable. He pointed out OPEC+‚s spare capacity and China’s heavy reliance on Iranian crude imports as factors influencing this perspective.
Additionally, Evans highlighted that if Iran and Israel escalate beyond symbolic attacks, it could provoke the United States, which currently has political motives for allowing Iranian oil shipments to reach international waters.
Investors are keeping an eye on the upcoming release of U.S. gross domestic product figures and March personal consumption expenditure data, which is the Fed’s preferred inflation gauge. These releases will provide insights into the trajectory of monetary policy moving forward.
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