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Oil falls 1% as investors reassess Mideast risks

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Oil falls 1% as investors reassess Mideast risks

NEW YORK (Reuters) – Oil prices fell about 1 percent on Tuesday, yielding some recent gains as investors reconsidered the likelihood of immediate supply disruptions in the Middle East after the United States killed a key commander. Iranian military last week.

FILE PHOTO: FILE PHOTO: Grandpuits Oil Refinery southeast of Paris, France, February 29, 2016. REUTERS / Christian Hartmann / File Photo

The BrCO LCOc1 fell $ 1.04, or 1.5%, to $ 67.87 a barrel at 12:59. EST (1759 GMT). US West Texas Intermediate (WTI) CLc1 crude fell 90 cents, or 1.4%, to $ 62.37 a barrel.

Prices rose in the previous two sessions due to fears of mounting conflict and possible disruptions in the Middle East after a January 3 drone attack in Baghdad killed Qassem Soleimani, chief of Iran's elite Quds Force, and Iran. promised revenge. Brent reached its highest level since September, while WTI rose to its strongest since April.

"The expansion of the Iran-related geographic risk premium appears to be losing steam as the complex appears to be taking a wait and see attitude ahead of possible Iranian retaliation for last week's events," Jim Ritterbusch , president of trade consulting firm Ritterbusch and Associates, said in a statement.

Consultancy Eurasia Group said Iran would likely focus on US military targets rather than energy.

"This does not mean that low-level harassment of commercial maritime transport or regional energy infrastructure will not continue, but these activities will not be severe," he added.

Julius Baer analyst Carsten Menke said the Iranian regime is "very rational and strategic."

"The costs of direct military confrontation are prohibitive, and disrupting oil flows would alienate loose allies such as China and India," he said.

"The closure of the Hormuz Strait, a key bottleneck to global oil flows, remains a very unlikely event."

However, the United States Maritime Administration's website has renewed its warning about threats to Iran's US commercial ships and their representatives in and around the Gulf.

Prices have also fallen, despite increased compliance by the Organization of Petroleum Exporting Countries (OPEC) in meeting production quota limits designed to reduce supply.

OPEC members pumped 29.5 million barrels per day (bpd) last month, a drop of 50,000 bpd from the revised November figure, according to a survey published by Reuters on Monday.

US oil inventories were likely to fall for the fourth consecutive week last week, although refined product inventories were expected to increase, a Reuters poll showed on Monday ahead of weekly data. (EIA / S)

The average estimate of six analysts was that oil inventories fell 3.6 million barrels in the week through January 3.

Additional reporting by Bozorgmehr Sharafedin and Alex Lawler in London and Florence Tan in Singapore; Edition by Marguerita Choy and David Gregorio

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