NEW YORK: Oil prices fell over 2% on Wednesday as fears of disruption to supplies due to conflict in the Middle East receded a day after top OPEC producer Saudi Arabia pledged to help stabilise the market.

Brent futures fell $2.10, or 2.4%, to $85.55 a barrel by 10:41 a.m. EDT (1441 GMT). US West Texas Intermediate (WTI) crude fell $2.55, or 3.0%, to $83.42. Brent and WTI had surged more than $3.50 on Monday on concern the clashes between Israel and Palestinian group Hamas could escalate into a broader conflict that could disrupt global oil supply.

Prices settled slightly lower on Tuesday after Saudi Arabia said it was working with regional and international partners to prevent an escalation, and reaffirmed its efforts to stabilise oil markets.

“We’ve taken 6.4% of the refinery utilization rate off the table in the last three EIA (US Energy Information Administration) reports… That’s over 1,000,000 barrels that didn’t go through the refinery,” said Bob Yawger, director of energy futures at Mizuho, a bank.

Moreover, in the higher rates environment moving forward that “could put the brakes on the upside as far as crude oil,” Yawger said. Interest rate hikes to tame inflation can slow economic growth and reduce oil demand. Exxon Mobil agreed to buy US rival Pioneer Natural Resources in an all-stock deal valued at $59.5 billion that would make it the biggest producer in the Permian shell, the largest US oilfield.

“Both WTI and Brent retreated yesterday as concerns of a sudden and unexpected supply disruption has been swept aside for now,” PVM analyst Tamas Varga said.