Amid mounting optimism that the Iran-Israel crisis won’t develop, oil prices dropped in Asian trade on Monday, consolidating losses from the previous week. Crude prices had also suffered sharp declines over the previous week due to concerns about a slowdown in demand and the bad state of the global economy, which somewhat countered rising tensions in the Middle East.
The main cause of the recent increases in oil prices was tensions in the Middle East. According to media reports on Monday, Israeli strikes in Gaza continued as rockets were fired at a Syrian coalition base led by the United States. Fears about rates and worries about demand affect oil prices.
Additionally, the markets were concerned that sticky inflation and higher-for-longer U.S. interest rates would stifle economic growth this year and reduce demand for oil globally. These worries were reinforced by recent data indicating a larger-than-expected build in U.S. inventories, which also raised doubts about how tight the oil markets will be in the upcoming months.
The Organization of Petroleum Exporting Countries and other producers had expected tighter supplies on production curbs, but U.S. oil production has maintained at record highs in recent months, somewhat offsetting those forecasts.
