Oil Down On Venezuela Deal As Analysts Eye Escalating Israel/Hamas Conflict

Meanwhile, India says "nyet" to Russian form of crude payment: File Image/Pixabay

Despite the rapid escalation of the Israel/Hamas conflict, crude traders on Monday were less worried about a resulting supply shortage than they were about U.S. sanctions against Venezuela crude exports being eased – and as a result, the commodity fell by over $1 per barrel.

Brent settled down $1.24, or 1.4 percent, at $89.65 per barrel, while West Texas Intermediate settled down $1.03, or 1.2 percent, at $86.66 per barrel.

Traders were motivated by news from unnamed sources that the U.S. had reached a preliminary deal to ease sanctions in return for a freer presidential election in Venezuela next year; the sources added that a deal could be signed as early as Tuesday.

Still, the Middle East conflict remained prominent on most peoples' radars, and analysts at ANZ Research stated that they expected oil prices to hit $100 per barrel in the short term because of the growing risk of a wider conflict in the oil-rich region.

They explained, "If [Iran] becomes involved, up to 20 million barrels per day [bpd] of oil could be at risk of disruption directly and through obstructed logistics."

Stephen Innes, managing partner at SPI Asset Management, added, "The ongoing conflict could weigh even further on the global oil supply over time by potentially reducing the probability of Saudi-Israeli normalization and posing downside risks to Iranian oil production, leading to a further surge in oil prices."

In other oil related news on Monday, Russia's challenges on the international export front made headlines again with seven cargoes of Russian crude oil imported by state-run oil refineries in India being held up due to the Indian government's sudden hesitancy to accept payment in Chinese currency.

According to the Times of India, Indian Oil Corp. has settled purchases in yuan previously, but Bharat Petroleum Corp and Hindustan Petroleum have not yet resorted to the Chinese currency although direct Russian suppliers have requested this.

India imported 1.55 million bpd of Russian oil in September, up by 16 percent compared to August.