Anika Begay
By Paul Carsten
LONDON (Reuters) – Oil prices were broadly steady on Wednesday as fears eased slightly that conflict could spread to the Middle East and threaten output in one of the world’s key crude-producing regions.
U.S. West Texas Intermediate crude futures slipped 19 cents, or 0.2%, to $78.16 a barrel by 1057 GMT.
After hitting a seven-month low of $76.30 early last week, Brent crude rose more than 3% on Monday to close at $82.30 a barrel, capping a five-day streak of gains.
“Crude’s recent rally came to a halt yesterday, with prices falling as fears of a retaliatory strike on Israel by Iran eased and the risk premium narrowed,” said Ashley Kelty, analyst at Panmure Liberum.
Iran had promised a stern response to the killing of the Hamas leader late last month. Three senior Iranian officials said only a ceasefire agreement in Gaza would prevent Iran from retaliating directly against Israel for the assassination.
Israel has neither confirmed nor denied its involvement, but has been fighting Hamas in Gaza since the group attacked Israel in October. To counter Iran, the U.S. Navy has deployed warships and a submarine to the Middle East.
“The extent of Iran’s retaliation, as well as Israel’s response, will likely determine whether the current conflict in the Middle East escalates into a regional conflict,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia (OTC).
Further hampering oil price gains, the International Energy Agency on Tuesday cut its 2025 forecast for oil demand growth, citing the impact of a weakening Chinese economy on consumption. That came after OPEC cut its 2024 demand forecast for similar reasons.
Signs of healthier demand in the United States had supported prices in earlier trading.
“The American Petroleum Institute reported a significant decline in inventories of 5.2 million barrels, much more than the expected decline of 2 million. The data signaled that oil demand remains healthy,” said Danish Lim, investment analyst at Phillip Nova.
Official U.S. government data from the Energy Information Administration will be available later Wednesday.
(This story has been republished to correct the spelling of “last” in paragraph 3.)
