Oil drops on Tuesday trade

Oil dropped on Tuesday despite a brief uptick spurred by positive economic data from Europe, as concerns over potential new US sanctions on Iran’s oil exports loomed, according to Reuters.

Global benchmark Brent crude futures dropped 0.6 per cent, or 51 cents to $86.49 a barrel, with US West Texas Intermediate crude futures falling by 0.7 per cent, or 56 cents to $81.34 by 1141 GMT.

Earlier, both benchmarks rose by $1 following reports of a robust expansion in Eurozone business activity, led by a strong recovery in the service industry.

Meanwhile, EU foreign ministers tentatively agreed to expand sanctions on Iran after its recent missile and drone attack on Israel. The US Senate is set to review a foreign aid package including sanctions targeting Iranian oil exports, focusing on ships, ports, and refineries that process Iranian oil.

“In a sober market, not drunk on the ‘what ifs’ of a direct war between Israel and Iran, sanctions would almost be tolerable,” said John Evans at oil broker PVM, citing OPEC+ spare capacity and the fact that China imports nearly all of Iran’s crude.