Oil prices plumb two-week lows as concerns about Iran-Israel war fade

Oil prices fell in American trade on Wednesday, extending losses for the second straight day and plumbing two-week lows, with US crude trading below $85 a barrel, while Brent traded below $90 as concerns about an Israel-Iran war recede. 

Prices are also pressured by higher US crude inventories according to initial data, with the EIA scheduled to release final data later today.

Prices 

US crude fell 1.6% to $84.03 a barrel, the lowest in two weeks, with a session-high at $85.47.

Brent fell 1.7% today to $88.57 a barrel, a two-week trough. 

US crude lost 0.5% on Tuesday, while Brent shed 0.3% as analysts expect little response from Israel to the latest Iranian attack.

Israeli Reaction 

So far Israel has heeded calls of restraint and hasn’t directly responded to the latest Iranian attack on its territory.

If a response was to occur, it’s likely to be limited, with the ongoing war in Gaza also expected to stabilize with a ceasefire agreement on the horizon. 

US Stocks

Initial data from the American Petroleum Institute reported a buildup of 4.1 million barrels in US crude stocks last week, passing estimates of a 1.5 million buildup. 

According to the data, total stocks are now up to 465.2 million barrels, the highest since July 2023, a negative sign for demand in the world’s largest fuel consumer. 

And minutes ago, the Energy Information Administration released official data showing a buildup of 2.7 million barrels last week, above estimates of a 1.6 million buildup.

According to the data, total stocks are up to 460.1 million barrels, the highest since the week ending June 2023. 

US Output 

The EIA reported no change to US crude output at 13.1 million bpd for the fifth straight week. 

Prices Outlook

Rystad Energy’s analysts have noted the high tensions in the Middle East, and the difficulty of predicting the next move, however they believe that all signs indicate restraint will prevail. 

As geopolitical tensions recede and US crude stocks increase, pressure is mounting on oil prices.