Crude oil prices fall more than 4% as looming surplus overshadows Iran-Israel tensions

Crude oil futures fell more than 4% on Tuesday, as a looming global oil surplus next year overshadowed the risk of a supply disruption from the conflict between Israel and Iran.

Oil prices spiked earlier this month after Iran hit Israel with a ballistic missile attack, raising fears that Israel would respond by targeting the Islamic Republic’s oil facilities.

The International Energy Agency said Tuesday that its members are prepared to take action if there is a supply disruption in the Middle East.

“For now, supply keeps flowing, and in the absence of a major disruption, the market is faced with a sizeable surplus in the new year,” the IEA said in its monthly report.

Here are today’s energy prices around 5:30 am ET:

• West Texas Intermediate November contract: $70.28 per barrel, down $3.55, or 4.9%. Year to date, U.S. crude oil has fallen 2%.
• Brent December contract: $73.81 per barrel, down $3.65, or 4.8%. Year to date, the global benchmark has declined about 4%.
• RBOB Gasoline November contract:  $2.0197 per gallon, down 4.2%. Year to date, gasoline has pulled back nearly 4%.
• Natural Gas November contract: $2.465 per thousand cubic feet, down 1.16%. Year to date, gas has fallen nearly 2%.

World oil demand is expected to grow by just under 900,000 barrels per day in 2024 and 1 million bpd in 2025, a significant slowdown compared to growth of 2 million bpd in post-pandemic period, according to the IEA.

Chinese oil demand is particularly weak, with consumption dropping by 500,000 bpd in August, the fourth monthly decline in a row, according to the agency. Meanwhile, crude production in the Americas, led by the U.S., is poised to grow by 1.5 million bpd this year and next, the IEA said.

OPEC has cut its oil 2024 forecast for the third consecutive month in a row.