He oil price gives up positions again this Tuesday after the sharp falls from the previous session and as they leave calming concerns about a escalation in the Middle East. This, after Israel's response to Iran this weekend has been more limited than expected. Thus, the barrel Brenta reference in Europe, lost 0.67%, to 70.94 dollars, while the barrel West Texasa reference in the US, fell 0.67%, to $68.08, despite having started the day with a 1% rebound. «Concerns about an imminent military escalation in the Middle East are calming. The oil market is in another bout of geopolitical shock following the Israeli invasion of Lebanon earlier this month. «This episode continues to be softer than expected considering the harsh rhetoric that is clouding the conflict,» says Julius Baer. In fact, Israel's attack on Iran seems to confirm for experts that The main actors in the region are not interested in a conflict that gets out of control and that adversaries are aware of their dependence on the support of major allies. «Israel warned Iran in advance, only attacked the military infrastructure and officially took responsibility. Since the outbreak of the war between Israel and Hamas last year, The oil market has witnessed five episodes of prices that skyrocketed as a result of geopolitical tensions. The duration and intensity of these price spikes have decreased each time,» they add. Therefore, they believe that the current episode is coming to an end and «that geopolitical risk premium has largely disappeared from oil prices. «We see less chance that the current give-and-take will lead to significant oil supply disruptions and have reduced the probabilities of such a medium shock scenario to less than 15%.» At the same time, the negotiation possibilities have increased. And, as geopolitics recedes, trends in supply and demand take center stage. «Oil demand is stagnating in the Western world, as well as in China, while supply is increasing incrementally in the Americas,» the firm comments. In this sense, it is worth noting that The US plans to buy up to 3 million barrels of crude oil for the Strategic Petroleum Reserve (SPR) which has provided some support to the market. «Oil nations will end up regaining parts of their vast spare capacity due to their reluctance to structurally give up market share, and this normalization process could evolve less gradually. Oil supplies expected to rise next yearwhile oil policy could bring downside risks. This outlook is partly reflected in the current bearish market mood. We expect oil to trade towards $65 and, therefore, we maintain our 'neutral' vision«, they conclude in Julius Baer.