Oil prices fell after their first consecutive weekly decline this year, as traders assessed the possible next steps from Iran and Israel amid escalating tensions in the Middle East.
Brent crude fell to near $87 a barrel after losing 3.5% last week, its biggest drop since early February. The United States imposed new sanctions on Iran’s oil sector and approved new funding for Ukraine in its war with Russia.
Oil has risen about 13% since the start of the year as geopolitical tensions and OPEC+ supply cuts tightened the market. Investors will be focusing on a slew of U.S. economic data this week, including the Federal Reserve’s preferred inflation gauge, which will provide further clues on the path of monetary policy.
Money managers are the most bullish on Brent crude since March 2021, buying oil futures to cash in on any rally amid rising geopolitical risks. Other markets are also pointing to the upside, with call options — which profit when prices rise — trading at a premium to put options.
The world's biggest oil majors, including TotalEnergies, ExxonMobil and Chevron, are also due to report earnings this week, as are Asian companies such as Reliance and CNOOC.
