Oil sinks on easing fears of Mideast war

LONDON: World oil prices sank Monday as traders hoped a region-wide conflict could still be avoided. European equities rose as the sliding oil market lifted hopes that the US Federal Reserve and the Bank of England will opt for no-change when they announce their latest interest-rate decisions on Wednesday and Thursday respectively.

Crude futures pared Friday’s near three percent gains as Zionist entity’s military continued air and ground operations in Gaza.

“Oil prices are coming under pressure... despite an intensification of the Zionist entity-Hamas war,” said Tickmill analyst James Harte. Despite Zionist entity stepping up its advances into Gaza, “for now markets appear to be looking beyond the reports on the view that the conflict looks likely to remain contained. “Although this view is keeping oil prices lower for now, the situation remains highly volatile and any sign of the conflict spilling over into a wider Middle East conflict should see oil prices firmly bid,” said Harte.

Instead of a broad offensive, officials have currently opted for targeted attacks on a day-to-day basis, tempering worries of an all-out war that could drag in Iran and even the United States. In Asian stock market trade, Tokyo fell one percent, while Sydney, Jakarta and Wellington were also in the red.

On the upside, Shanghai, Seoul, Mumbai, Singapore, Taipei and Bangkok rose while Hong Kong was marginally higher. “It’s a big week for interest rate decisions,” said AJ Bell investment director Russ Mould. Both the Fed and the BoE “are expected to keep rates unchanged, which should provide some relief to investors, although much of the focus will be on commentary about the path for rates going into 2024”, Mould added.

The decisions come one week after the European Central Bank left eurozone interest rates unchanged last Thursday, bringing an end to a series of hikes that started in July last year. Policymakers had raised rates at each of their last 10 meetings as they sought to rein in soaring inflation driven in large part by surging energy prices in the wake of Russia’s invasion of Ukraine. But ebbing price pressures and signs of weakness in the economy prompted the ECB to hold borrowing costs.