Global oil costs have fallen back sharply amid hopes that a ceasefire between Israel and Iran will end the threat of disruption to crucial energy flows for the world economy.
The cost of a barrel of Brent crude, the international benchmark, was as high as $81 late on Sunday night as financial markets opened in Asia.
It was the first reaction to news of the US bombing of Iran’s nuclear facilities over the weekend and built on gains seen widely since Israel first began its strikes 10 days previously.
Israel-Iran live updates: Trump swears as he rages at both countries
But prices came down on Monday evening after it became clear that Iran’s retaliation, through missile attacks on a US base in Qatar, were a mere face-saving exercise due to the Americans being pre-warned by Tehran.
Drops of more than 7% in US trading were followed by a further 3% fall on Tuesday, with Brent currently standing just below $68.
It remains, however, $5 a barrel higher on where it started the month and reflects the continuing, possible, threat to shipping in the key Strait of Hormuz which handles 20% of global oil and 30% of natural gas supplies.
The main concerns in the energy market were over potential disruption to liquefied natural gas (LNG) deliveries as it remains in high demand.
Europe is yet to fully restock following the harsh end to last winter which drained storage levels.
As such prices had already been driven up by steep competition from Asia for Gulf supplies.
UK day-ahead natural gas prices were more than 25% up in the month, as of Monday, and have not fallen as sharply as oil costs.
Financial services…
