Oil prices fell more than $1 on Tuesday as traders took profits from a rally in the previous session that lifted the market to its highest level in over a month amid fears that the Middle East could be on the brink of a region-wide war.
Brent crude futures fell $1.17, or 1.5%, to $79.76 per barrel at around 0420 GMT. U.S. West Texas Intermediate futures fell $1.19, or 1.6%, to $75.95 a barrel.
Both contracts rose over 3% on Monday to their highest levels since late-August, adding to last week’s rally of 8%, the biggest weekly gain in over a year, on worries that escalating hostilities could disrupt oil supply from the Middle East.
Fighting in the Middle East intensified after Iran-backed Hezbollah fired rockets at Israel’s third-largest city, Haifa, and Israel looked poised to expand its offensive into Lebanon, a year after the Hamas attack on Israel that sparked Israel’s ongoing war in Gaza.
“The geopolitical tensions in the Middle East rock on, but there has been some paring of exposure lately on some expectations that any disruptions to energy supplies may be more measured,” said Yeap Jun Rong, market strategist at IG.
