By Colleen Howe
BEIJING (Reuters) – Oil prices paused their recent advance and fell in Asian trade on Tuesday, after rising more than 7 percent in the previous three sessions on supply concerns amid fears of a wider conflict in the Middle East and the closure of Libyan oil fields.
Brent crude futures fell 32 cents, or 0.39%, to $81.11 a barrel at 01:54 GMT, while U.S. West Texas Intermediate crude futures fell 36 cents, or 0.46%, to $77.06 a barrel.
Oil markets are declining after strong gains over the past three trading days, amid expectations in the US that fuel demand could rise, military attacks between Israel and Hezbollah in Lebanon over the weekend that could precipitate a wider conflict in the Middle East and potentially disrupt supplies from the key producing region, and shutdowns in Libya.
During this period, WTI rose by 7.6% and Brent by 7%.
“Markets remain nervous as skirmishes between Israel and Hezbollah intensify,” ANZ analysts said in a note. “The risk of oil supply disruption has become real after the government in eastern Libya announced it would halt all oil production and exports as the political dispute intensified.”
This political dispute could affect the North African country’s production by as much as 1.17 million barrels per day, according to the latest Reuters production survey from the Organization of the Petroleum Exporting Countries in July.
Oil prices were also boosted by the escalation of the conflict between Israel and Hezbollah, which has seen a flurry of rocket fire as it sought revenge for the killing of a senior commander last month.
A senior US general said on Monday that while the threat of a broader attack has eased somewhat, a possible Iranian attack on Israel remains a risk.
(Reporting by Colleen Howe; Editing by Christian Schmollinger)
