Oil prices fell sharply on Monday (January 29), even as the US prepared to respond to a fatal attack on its military in the Middle East. Investors once again focused more on the Chinese economy than on geopolitical tensions.

At the end of the trading session on January 29, Brent oil futures fell by $1.15 (or 1.38%) to $82.40 per barrel. WTI oil futures lost $1.23 (or 1.58%) to $76.78 per barrel. Oil prices declined after a strong increase last week.

A court in Hong Kong on Monday ordered the liquidation of China Evergrande, the world's most indebted property developer. The real estate sector in China is facing a debt crisis that is putting pressure on the country's economy, raising concerns that Beijing's crude oil demand might decline.

Oil prices had risen by more than 1% earlier in the session after missiles by Iranian-backed militants killed American soldiers in Jordan over the weekend. However, market concerns about the Chinese economy and North American crude oil production have repeatedly overshadowed geopolitical tensions.

According to the White House, the US vowed to respond to the attack, which killed 3 American soldiers and injured many others in a drone attack on forces stationed in northeastern Jordan near the Syrian border on January 28.

These are the first Americans killed by enemy attacks since the war between Israel and Hamas began on October 7, 2023.

Iran's Foreign Ministry denied involvement in the attack, stating that the militants did not take orders from Tehran.

Although oil prices have largely remained subdued in response to the Middle East conflict so far, Helima Croft of RBC Capital Markets said this could change if a confrontation between the US and Iran leads to disruptions in the Strait of Hormuz, a critical chokepoint for crude oil supplies.

Source: Vietstock