Oil prices are falling

Oil fell as U.S. President Joe Biden’s administration plans to visit Israel this week. U.S. crude fell to $86 a barrel after closing more than 1 percent lower on Monday. Biden is set to travel to the country on Wednesday to show support for the Hamas-Israel conflict. Israel is also pressing ahead with plans for a ground offensive in Gaza. The crude market is on edge over concerns that the sudden crisis in the Middle East risks spreading beyond Israel and Gaza, potentially jeopardizing crude flows from major producers. Iran, which backs Hamas, has warned that the war is “approaching an inevitable stage”. Tehran also supports the Hezbollah armed group in southern Lebanon. “The restraint on oil prices is largely dependent on the conflict not spreading more broadly,” said Vishnu Varathan, head of Asia economics and strategy at Mizuho Bank in Singapore. He said that while crude prices are not fundamentally at $100 to $120, such a rise is a significant and growing risk. Beyond the region, meanwhile, crude investors will be monitoring events in Barbados, where Venezuela’s government could sign a deal with the opposition on Tuesday. If signed, such a deal could pave the way for U.S. sanctions relief on the country and potentially boost oil exports.