LONDON: Oil dipped for a second day on Tuesday as concerns about Middle East supply eased after Iran’s weekend attack on Israel while stronger than expected U.S. retail sales dampened investor hopes for demand-spurring cuts to interest rates.
Prices, however, held a narrow range after data showed that top oil consumer China’s economy grew faster than expected in the past quarter, with further support from the International Monetary Fund forecasting another year of slow but steady growth for the global economy.
Brent futures for June delivery fell 31 cents, or 0.3%, to $89.79 a barrel by 1315 GMT. U.S. crude for May slipped 32 cents, or 0.4%, to $85.09.
Oil prices slip after Iran attack, US economic data
“The balancing act between sticky inflation, a hesitant Fed and the gradual move towards a full-blown regional conflict keeps oil … in its range,” said Tamas Varga of oil broker PVM.
“Material disruption to oil production, supply or shipping must take place to approach the $100 a barrel milestone. Currently such a development appears implausible.”
Concern that Iran would respond to the strike on its embassy compound in Damascus helped to send Brent to $92.18 on Friday for its highest since October.
But prices fell on Monday after Iran’s attack on Israel proved to be less damaging than anticipated, easing concerns of a quickly intensifying conflict that could disrupt supply.
“As the risk to supply is waning and a military response from Israel looks less likely as more time passes, prices are holding steady,” said Rystad Energy’s Jorge Leon. “Tensions are high and either party’s next moves are hard to predict.”
Iran will respond to any action against its interests, President Ebrahim Raisi, he was reported as saying by the Iranian Student News Agency a day after Israel warned it will respond to Tehran’s weekend drone and missile attack.
Meanwhile, U.S. House Speaker Mike Johnson flagged more sanctions to come on Russia and Iran in coming spending legislation.
Iran produces more than 3 million barrels per day of crude oil as a major producer within the Organization of the Petroleum Exporting Countries (OPEC).