Brent Oil Falls Below $80 as China Holds Back on More Stimulus

(Bloomberg) -- Brent oil dropped below $80 a barrel as China’s top economic planner ended a highly anticipated briefing on Tuesday without new stimulus measures, sparking a risk-off mood across markets.

The global benchmark lost as much as 2.2%, snapping a five-day rally, while West Texas Intermediate traded near $76 a barrel. The National Development and Reform Commission said it’s confident in reaching economic targets this year, but the lack new spending disappointed investors.

Still, the oil market remains susceptible to a flare-up in the Middle East. Traders are watching for Israel’s retaliation against Iran following a missile attack last week, which raised concerns over an all-out war.

The briefing from the NDRC “did not sit well with investors,” said Arne Lohmann Rasmussen, head of research at A/S Global Risk Management. China is closely linked to commodity demand, so the disappointment was immediately reflected in the price of oil, he added.

Iron ore and base metals declined, while a gauge of Chinese shares listed in Hong Kong slid as much as 11%. NDRC officials said that they would speed up spending while largely reiterating plans to boost investment.

Israel, meanwhile, escalated fighting against Iran-backed groups on Monday, keeping the market on edge. The region accounts for a third of global crude supply, and President Joe Biden has sought to discourage Israel from attacking Tehran’s oil fields.

Other markets have been jolted by the hostilities, with a gauge of implied volatility for Brent near the highest in a year. There’s been a deluge of call options — which profits buyers when futures gain — and the premium of Brent calls over puts swelled to the widest in a year as of Monday’s close.

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