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Brent crude futures slipped 10 cents, or 0.1%, to $80.59 a
barrel by 1057 GMT. U.S. West Texas Intermediate crude futures
were down 19 cents, or 0.2%, to $78.16 per barrel.
After hitting a seven-month low of $76.30 at the beginning of
lat week, Brent rose more than 3% on Monday to cap a five-day
run of gains, closing at $82.30 a barrel.
"The recent rally in crude came to a halt yesterday with prices
falling back as fears of a retaliatory attack on Israel by Iran
receded, with the risk premium slashed," said Ashley Kelty, an
analyst at Panmure Liberum.
Iran had vowed a severe response to the killing of the leader of
Hamas late last month. Three senior Iranian officials have said
that only a ceasefire deal in Gaza would hold Iran back from
direct retaliation against Israel for the assassination.
Israel has neither confirmed nor denied its involvement but it
is fighting in Gaza against Hamas after the group attacked
Israel in October. To counter Iran, the United States Navy has
deployed warships and a submarine to the Middle East.
"The extent of Iran's reprisal, as well as Israel's response,
will likely determine whether the current conflict in the Middle
East broadens into a regional conflict," said Vivek Dhar, an
analyst at Commonwealth Bank of Australia.
Also hindering oil price gains, the International Energy Agency
trimmed on Tuesday its 2025 estimate for oil demand growth,
citing the impact of a weakened Chinese economy on consumption.
That came after OPEC cut expected demand for 2024 for similar
reasons.
Signs of healthier U.S. demand had supported prices in earlier
trading.
"The American Petroleum Institute reported a significant
drawdown in U.S. crude inventories of 5.2 million barrels, far
more than a forecasted decline of 2 million. The data signalled
that oil demand remains healthy," said Danish Lim, investment
analyst at Phillip Nova.
Official U.S. government data from the Energy Information
Administration is due later on Wednesday.
(Reporting by Paul Carsten in London, Laila Kearney in New York
and Emily Chow in Singapore; Additional reporting by Arunima
Kumar in Bengaluru; Editing by Shounak Dasgupta and Emelia
Sithole-Matarise)
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