Oil Prices Decline on April 19 Amid Geopolitical Tensions

On April 19, 2024, the prices of WTI Crude and Brent Crude oil experienced a significant decline at the NYMEX and ICE stock exchanges. WTI Crude oil price fell by 1.80% to $83.34 per barrel, while Brent Crude oil price dropped by 2.25% to $87.23 per barrel.

The initial gains in oil prices, which had risen by more than three dollars in early trading following reports of explosions in the Iranian city of Isfahan and indications of an Israeli attack, diminished at settlement. Iran's downplaying of the attacks later in the trading session reduced oil's gains. US crude futures settled at $83.14 per barrel, and Brent crude futures settled at $87.29 per barrel.

Why this matters: The decline in oil prices amid geopolitical tensions between Israel and Iran highlights the sensitivity of the global oil market to regional conflicts and their potential impact on supply and demand dynamics. Fluctuations in oil prices can have far-reaching consequences for economies, industries, and consumers worldwide.

The decline in oil prices was attributed to reported Israeli retaliatory actions against Iran and U.S. legislators incorporating sanctions targeting Iran's oil exports into an upcoming Ukraine aid bill. Additionally, the U.S. has reimposed oil sanctions on Venezuela, and the Biden administration is committed to keeping gas prices manageable this summer.

Goldman Sachs is maintaining a projected $90/bbl ceiling for Brent in scenarios without geopolitical disruptions, citing considerable spare capacity, increased OPEC+ production, and market-stabilizing responses. The International Atomic Energy Agency (IAEA) also confirmed that there has been no damage to Iranian nuclear sites.

Prices have fallen by about 3% since Monday, April 15, achieving their largest weekly loss since February. On April 19, the front month ICE Brent Crude for June delivery lost $3.16 per barrel, or 3.49%, to $87.29, marking the largest one-week net and percentage decline since the week ending February 2, 2024. Brent Crude has been down for two consecutive weeks, declining $3.88 or 4.26% over the last two weeks, which is the largest two-week net and percentage decline since the week ending December 8, 2023.

Despite the decline, Brent Crude is currently off 9.59% from its 52-week high of $96.55 hit on September 27, 2023, but up 21.51% from its 52-week low of $71.84 hit on June 12, 2023. Year-to-date, Brent Crude is up $10.25 or 13.30%.

The U.S. oil rig count also rose by 5 to 511 in the week. While oil prices initially surged amid fears of a widening conflict, they gave up much of their early gains as Iranian officials downplayed the attack. "The upside for oil prices was modest as reports indicated that Israel's retaliatory attack on Iran did not cause much damage," according to market analysts.

Key Takeaways

• Oil prices fell significantly on April 19, 2024, with WTI down 1.80% and Brent down 2.25%.
• Initial price gains due to reports of attacks in Iran were reduced as Iran downplayed the incidents.
• Decline attributed to US sanctions on Iran and Venezuela, and Biden's efforts to keep gas prices down.
• Brent Crude is down 9.59% from its 52-week high but up 13.30% year-to-date.
• US oil rig count rose by 5 to 511, but oil price gains were modest due to limited damage from attacks.