Oil prices slid by more than 2 percent on October 1 as a stronger supply outlook and tepid global demand growth outweighed fears over geopolitical risks and escalating tensions in the Middle East and its impact on crude exports from the region. Following an Israeli airstrike that killed Hezbollah leader Hassan Nasrallah, Iran’s supreme leader vowed "more crushing blows" in retaliation.
Brent crude futures LCOc1 were down $1.49, or 2.08 percent, at $70.21 a barrel by 0840 GMT. U.S. West Texas Intermediate crude futures CLc1 lost $1.55, or 2.27 percent, to $66.62, reported news agency Reuters.
A panel of top ministers from the OPEC+ producer group will meet on October 2 to review the market, with no policy changes expected.
OPEC+ comprises of the Organizations of the Petroleum Exporting Countries (OPEC) plus allies including Russia and is scheduled to raise output by 180,000 barrels per day (bpd) in December.
The global crude benchmark plunged almost 17% last quarter, and is now lower year-to-date. Expectations that OPEC+ will make good on plans to bring back production, as well as a slowdown in China — even after massive stimulus was unveiled last week — have weighed on prices.
"The idea of returning Libyan crude and the forthcoming trimming of voluntary cuts by OPEC+ in December serves as interference for those contemplating reduced oil stocks in the U.S. and improving cracks," John Evans, analyst at oil broker PVM, told Reuters.
Also Read | Markets not pricing in Middle East conflict risk yet, correction likely if crude oil spikes: Analysts
Israel began ground incursions in Lebanon on Tuesday, with its military saying troops had begun raids against Hezbollah targets in the border area.
The attacks follow Israel's killing on Friday of Hezbollah head Hassan Nasrallah and represent an escalation in a conflict that now threatens to suck in the United States and Iran.
"Worries that Iran will be drawn into action against Israel have helped support prices, but current rhetoric from Iran suggests they are not keen on an escalation beyond their proxies in Yemen, Lebanon and Palestine," Panmure Gordon analyst Ashley Kelty told Reuters.
With inputs from agencies
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