Oil Prices Reel Back as Traders Weigh Supply Risks Amid Escalating Conflict

Oil prices fell back down after reaching over one-month highs earlier in the session. Traders are weighing the risks of supply disruptions following overnight strikes by the US and Iran against signs that crude supplies continue to reach the market.

Brent crude futures dropped 57 cents, or 0.6 per cent, to $94.08 a barrel by 1135 GMT, while US West Texas Intermediate crude futures were down 72 cents, or 0.80 per cent, to $89.50.

Ole Hansen, head of commodity strategy at Saxo Bank, said the market is facing a 'binary risk.' He warned that any escalation in the conflict would further undermine the prospect of a peace deal and could send oil prices tumbling.

The US and Iran were back on a war footing today after the most significant exchange of fire in weeks. The Islamic Revolutionary Guard Corps said the US attacks would further restrict traffic through the Strait of Hormuz, a critical waterway that carried about one-fifth of the global oil consumed before the conflict.