WTI trades around $68.50 after dropping more than 4% amid easing geopolitical tensions

• WTI loses ground due to easing geopolitical tensions in the Middle East.
• Israel's attack on missile and air defense sites in Iran proved to be less aggressive than many had anticipated.
• OPEC+ plans to roll back its production cuts in December, with aiming to boost output by 180,000 barrels per day.

West Texas Intermediate (WTI) Oil prices fell by more than 4%, trading around $68.40 during the Asian session on Monday. This decline can be linked to easing geopolitical tensions following Israel's targeted airstrikes on Iran early Saturday, which were primarily aimed at missile and air defense sites and turned out to be less aggressive than many had expected.

Israeli jets carried out three waves of strikes before dawn on Saturday, targeting missile factories and other locations near Tehran and in western Iran. Despite this, Iran has downplayed the damage, with Supreme Leader Ayatollah Ali Khamenei stating that the attack "should neither be downplayed nor exaggerated." The oil market appears to interpret the Israeli strike and Iran's response as a sign of de-escalation from the previously heightened tensions, per Reuters.

The OPEC+ group, comprising the Organization of the Petroleum Exporting Countries and allies such as Russia, is still on track to begin rolling back some of its production cuts in December, aiming to increase output by 180,000 barrels per day (bpd). This will mark the first step in a series of output increases planned for 2025.

Demand in Asia, which accounts for about two-thirds of global seaborne crude imports, has been weak throughout 2024. The October arrivals are expected to follow this trend. A significant portion of this decline can be attributed to China, the world's largest crude importer, which has experienced a drop of 350,000 bpd in crude arrivals during the first nine months of this year compared to the same period in 2023.