Oil prices slip as traders shake off prospect of wider Middle East conflict

By William Watts

Oil futures edged lower Monday, losing ground as traders appeared to shrug off the risk of a wider Middle Eastern conflict that could threaten crude supplies after a strike by Israel on Beirut killed the leader of Iran-backed Hezbollah.

Price moves

West Texas Intermediate crude CL00 for November delivery CL.1 CLX24 fell 15 cents, or 0.2%.November Brent crude BRNX24, the global benchmark, was off 28 cents, or 0.4%, at $71.70 a barrel on ICE Futures Europe. The more actively traded December contract BRN00 BRNZ24 was down 5 cents, or 0.1%, at $71.49 a barrel.

Market drivers

Hezbollah on Saturday confirmed that an Israeli strike had killed its leader Hassan Nasrallah, the latest and heaviest in a series of blows delivered by Israel against the Iranian proxy in recent weeks. A number of other top officials were also killed in the attack and subsequent strikes over the weekend. Israel also targeted a seaport and power plants in Yemen after Iran-backed Houthi rebels fired missiles toward Tel Aviv in recent days, news reports said.

"The oil market's response to developments in the Middle East over the weekend has been somewhat muted," Warren Peterson and Ewa Manthey, commodity strategists at ING, said in a note. "The market has become increasingly numb to the tension in the region given that, after almost a year of conflict, there has still been no impact on oil production."

The focus remains on Iran. If the country became involved in a more direct confrontation with Israel or the U.S., market attention would shift more decidedly toward the prospect of a supply disruption, the analysts wrote.

At the same time, the Organization of the Petroleum Exporting Countries is sitting on a large amount of spare production capacity, they said, which also provides the market with some comfort.

Investors will also focus on a meeting of the OPEC+ Joint Ministerial Monitoring Committee on Wednesday for any clues to production plans. Crude fell last week, with pressure tied in part to a Financial Times report, citing people familiar with Saudi officials' thinking, which said the kingdom was ready to throw in the towel on voluntary production cuts in December in a bid to reclaim market share.

Last week's retreat by crude came even as other commodities rallied in response to aggressive stimulus measures by China.

-Associated Press contributed.

-William Watts

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09-30-24 0702ET

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