Oil prices fall after Middle East jitters drive strong gains By Investing.com

Investing.com– Oil prices fell in Asian trade on Tuesday, retreating after lingering concerns over the worsening conflict in the Middle East led to strong gains over the past week.

Oil markets were hit by a bit of profit after hitting more than one-month highs in the past week.

Concerns about widespread supply disruptions in the US supported oil prices as the country braced for its second major hurricane – Milton – in a month.

U.S. crude that expires in December was down 0.6 percent at $80.42 a barrel, while it was down 0.6 percent at $76.04 a barrel by 9:05 p.m. ET (01: 05 GMT). Both contracts have been at their maximum for over a month.

But further gains in crude oil were hampered by dollar strength as expectations of a smaller US interest rate cut boosted the greenback. US inflation data is in focus this week.

Traders were also eyeing the reopening of Chinese markets after a week-long holiday, especially as the world’s biggest oil importer announced a series of major stimulus measures.

Fears of escalation in the Middle East persist

Fears of an escalation in the Middle East remained the biggest support for oil markets as fighting between Israel and Hezbollah forces intensified this week. Hezbollah fired hundreds of rockets into Israeli territory on Monday as Israel seeks to step up its offensive against Lebanon.

This came after Iran launched dozens of missiles at Israel last week in retaliation for its offensives against Hamas and Hezbollah.

Monday marked a year since Hamas attacks on Israeli targets sparked a renewed war between the two, with the conflict showing little sign of escalating.

Oil bulls have bet that an escalation of the conflict will disrupt oil supplies from the Middle East, especially if Israel attacks Iran’s oil facilities.

Hurricane Milton focuses on disruption

Oil markets were also watching Hurricane Milton’s impact on U.S. oil production, with the storm expected to pass through the Gulf of Mexico before making landfall on Florida’s west coast this week.

While the hurricane is expected to miss most of the oil infrastructure in the Gulf of Mexico, several ports in the region were seen imposing restrictions, which could disrupt oil shipments.