Oil falls 3% as concerns ease on potential Iran supply disruption

Oil prices slid 3% in early Asian trade on Tuesday after a media report said Israel is willing not to strike Iranian oil targets, which eased fears of a supply disruption, and after OPEC lowered its outlook for global oil demand growth in 2024 and 2025.

Both benchmarks plunged 3% in early trade on Tuesday, following a 2% drop on Monday. Brent crude futures were down $2.27 at $75.19 per barrel, while U.S. West Texas Intermediate futures fell $2.22 to $71.60 per barrel as of 0127 GMT.

Prices have fallen about $4 this week, nearly wiping out cumulative gains made in the seven sessions up to last Friday when investors were concerned about supply risks as Israel planned to retaliate against a missile attack from Iran.

Israeli Prime Minister Benjamin Netanyahu has told the U.S. that Israel is willing to strike Iranian military targets and not nuclear or oil ones, the Washington Post reported on Monday.

OPEC on Monday cut its forecast for global oil demand growth in 2024 and also lowered its projection for next year.

"This is the third straight monthly downgrade, suggesting its previously optimistic forecasts have further to retreat," analysts at ANZ Research said in a note on Tuesday.

"It (Iraq) is still not making any progress in the extra cuts it promised to compensate for over production," ANZ said.

Also weighing on prices was a decline in crude shipments to the world's largest oil importer China for the first nine months of the year, with data showing imports fell nearly 3% from last year.

China accounted for the bulk of the 2024 downgrade by OPEC, as it trimmed its growth forecast for the country to 580,000 barrels per day (bpd) from 650,000 bpd.

Deflationary pressures in China worsened in September, according to official data released on Saturday. A press conference the same day left investors guessing about the overall size of a stimulus package to revive the fortunes of the world's second-largest economy.