Oil slumped to the lowest price since the war in the Middle East began as Israel faces growing pressure to limit its bombardments to help hostage negotiations, keeping the conflict limited entering its fourth week.

West Texas Intermediate slid 3.8 per cent to settle below US$83 a barrel, the lowest in three weeks. Israel’s ground incursion into Gaza has so far been less extensive than some investors expected, and the risk premium that received a boost on Friday as the invasion commenced has since been wiped out. Losses deepened on Monday after crude slipped below technical support levels.

“The selling accelerated once WTI broke Friday’s low, where a bunch of stops were undoubtedly resting,” said Fawad Razaqzada, a market analyst at City Index and Forex.com. “Still, there is a possibility that the bulls will try and defend key support sitting below the $82,” with the geopolitical risks and supply cuts from OPEC+ limiting declines.

Israeli Prime Minister Benjamin Netanyahu said in a televised speech Monday that his country won’t agree to any cease-fire with Hamas while adding that the nation also struck Iran-backed Hezbollah in response to attacks.

Global oil markets have been in a volatile trade for the past month, roiled by the war and its potential to spread beyond Israel and Gaza. The Middle East accounts for a third of global crude supplies, and concerns have mounted that an escalation of the war may lead to attacks on oil tankers, threats to maritime chokepoints and reduced exports from Iran.

Iran is the main backer of Hamas, which has been designated a terrorist group by the US and the European Union. Tehran also supports Hezbollah in Lebanon, which has the potential to open up a second front in the conflict.

Before crude futures began trading on Monday in Asia, both Tehran and Washington had warned that the conflict could still spread. Iran said Israel’s moves may “force everyone to take action.” The US, meanwhile, saw an “elevated risk” of regional spillover, according to National Security Advisor Jake Sullivan.

Elsewhere in markets, Saudi Arabia, which leads the OPEC+ alliance along with Russia, may refrain from hiking the selling price of its crude for Asian customers for the first time in six months after weak Chinese manufacturing data signaled that demand on the continent remains sluggish.

Loadings from Russian ports on the Black and Baltic Seas, including some batches originating in Belarus, are set at a total of 2.16 million tons for November, according to industry data seen by Bloomberg, as an export ban that roiled this month’s flows is reversed. That’s 56 per cent above the October plan and Russia’s highest planned exports in three months.

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WTI for December delivery dropped 3.8 per cent to settle at $82.31 a barrel in New York.

Brent for December settlement fell 3.3 per cent to settle at $87.45 a barrel.

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