Oil falls on demand concerns

Oil fell from a three-week high as lingering concerns about the demand outlook offset ongoing tensions in the Middle East. Brent crude fell below $83 a barrel after rising almost 8% in the past two weeks, while U.S. crude traded around $79. The International Energy Agency last week warned oil markets could be oversupplied all year long, and China’s weak economy has raised questions about consumption. Still, attacks on shipping in the Red Sea and the Israel-Hamas war are preventing prices from falling too much. Israel has said it will launch a ground offensive in Gaza’s Rafah enclave if the hostages are not released before mid-March. “Physical oil supply needs to be disrupted for any oil price premium to be sustained in oil markets because of Middle East tensions,” Vivek Dhar, an analyst at Commonwealth Bank of Australia, said. He added that Brent futures are expected to give up gains in the coming weeks as supply concerns grow. Bullish forecasts for global benchmark Brent reached their highest level since 2021 after geopolitical risks in the region, which accounts for about a third of the world's crude oil production, increased.