(Bloomberg) -- Oil dipped after an early-week surge as the impact on crude flows from the Israel-Hamas war remained contained and Saudi Arabia pledged to help ensure market stability.
West Texas Intermediate nudged below $86 a barrel, after the kingdom on Tuesday reiterated support for efforts by OPEC+ to balance oil markets and for “everything” that enhances global economic growth. A war-risk premium returned to the market on Monday following Hamas' attack on Israel over the weekend, sparking concerns that the conflict will lead to wider instability in the Middle East.
Oil traders have been watching carefully for spillover from the conflict that could endanger crude flows. The war adds another complicated dimension to global crude trading after prices surged in the third quarter as OPEC+ choked off supplies to tighten the market, then gave up some gains as demand concerns flared up.
“The market now needs to price in the tail-risk of any escalation of the conflict, and its implications on crude-supplying nations, such as Iran,” said Gao Mingyu, Beijing-based chief energy analyst at SDIC Essence Futures Co.
The US and Venezuela, meanwhile, are close to reaching an understanding that would bring limited sanctions relief in exchange for steps to ensure fair elections, according to people familiar with the matter. As part of the informal deal, the US would be willing to lift some oil and banking sanctions.
--With assistance from Sarah Chen.
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