TOKYO: Oil dropped on Tuesday although the market remains on tenterhooks over the threat of a military response to attacks on Saudi Arabian crude oil facilities that cut the kingdom's output in half and sent prices soaring by the most in decades.
"It's not a great thing to say, but if something like this is going to happen, at least it happened at a time when there is a surplus in crude and U.S. production is growing at such a fast clip," said Tony Nunan, Tokyo-based oil risk manager at Mitsubishi Corp. Relations between the United States and Iran have deteriorated since Trump pulled out of the Iran nuclear accord last year and reimposed sanctions on its oil exports.
"However, let's not also forget that the demand picture isn't great right now, which will dampen the oil price quickly. Most recently China's industrial production figures disappointed overnight," Cincotta said.