(Reuters) – Brent oil futures steadied above $90 a barrel on Monday after passing the threshold on Friday, as investors waited to see if the Israel-Hamas conflict draws in other countries.
Brent futures were down 39 cents, or 0.43%, at $90.50 a barrel at 0855 GMT. U.S. West Texas Intermediate (WTI) crude fell 26 cents, or 0.3%, to $87.43 a barrel.
Both benchmarks climbed nearly 6% on Friday, taking Brent 7.5% higher on the week and WTI up 5.9%, as investors priced in the possibility of a wider Middle East conflict.
The war between Islamist group Hamas and Israel poses one of the most significant geopolitical risks to oil markets since Russia’s invasion of Ukraine last year, amid concerns about any potential escalation involving Iran.
Iran warned on Saturday that if Israel’s “war crimes and genocide” were not stopped then the situation could spiral out of control with “far-reaching consequences.”
With fears of the conflict escalating, U.S. Secretary of State Antony Blinken will return to Israel on Monday to talk “about the way forward” after several days of shuttle diplomacy between Arab states.
Israel denied on Monday that a ceasefire had been agreed in southern Gaza, after security sources in Egypt had earlier said a deal had been reached to pause strikes and allow foreigners to leave and aid to enter the region.
“Investors are trying to figure out the impact of the conflict while a large-scale ground assault has not begun after the 24-hour deadline that Israel first notified residents of the northern half of Gaza to flee to the south,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan (OTC:NSANY) Securities.
China and Russia’s foreign ministers met in Beijing on Monday, where they discussed the Israel-Hamas conflict.
“The situation remains fluid and ugly for price prediction with little chance of a return to a relative normal market, whatever that might be post-COVID/Ukraine,” PVM analyst John Evans said.
Otherwise, the United States last week imposed the first sanctions on owners of tankers carrying Russian oil priced above the G7’s price cap of $60 a barrel, an effort to close loopholes in the mechanism designed to punish Moscow for its invasion of Ukraine.
Russia is one of the world’s top crude exporters, and the tighter U.S. scrutiny of its shipments could curtail supply.
