- Oil prices fell, shedding earlier gains after missiles launched by Iran-backed militants killed U.S. troops in Jordan and struck a fuel tanker in the Red Sea.
- Three U.S. service members were killed and many injured in an unmanned aerial drone attack on forces stationed in a northeast Jordan outpost.
- A court in Hong Kong on Monday ordered the liquidation of China Evergrande, the world's most indebted property developer.
Oil prices fell Monday even as the U.S. prepares to respond to a lethal attack on its troops in the Middle East, with traders once again focusing more on China's economy than geopolitical tensions.
Brent futures fell $1.15, or 1.38%, to settle $82.40 a barrel, while U.S. West Texas Intermediate dropped $1.23, or 1.58%, to settle at $76.78 a barrel. The pullback comes after crude prices rallied last week.
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A court in Hong Kong on Monday ordered the liquidation of China Evergrande, the world's most indebted property developer. China's real estate sector faces a debt crisis that is weighing on the country's economy, raising worries among traders that Beijing's demand for crude could be softer as a result.
Oil prices rose more than 1% earlier in the trading session after missiles launched by Iran-backed militants killed U.S. troops in Jordan on the weekend. But anxiety in the oil market about China's economy and crude production in North America have repeatedly overshadowed geopolitical tensions.
"People are trying to weigh up the economic news out of China – what are the potential implications for demand," Helima Croft with RBC Capital Markets told CNBC's "Worldwide Exchange" on Monday.
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"There's a corner of this market that believes that this is not going to escalate to Iran," Croft said of the conflict in the Middle East. "But again, we are getting closer and closer to a wider war," she said.
U.S. vows response to attack
Three U.S. service members were killed and many injured in an unmanned aerial drone attack on forces stationed in a northeast Jordan outpost near the Syria border on Sunday, according to the White House.
They were the first American fatalities from enemy attacks since Israel's war with Hamas began on Oct. 7.
"While we are still gathering the facts of this attack, we know it was carried out by radical Iran-backed militant groups operating in Syria and Iraq," U.S. President Joe Biden said in a statement.
"Have no doubt — we will hold all those responsible to account at a time and in a manner our choosing," he said.
Defense Secretary Lloyd Austin said Sunday that the Biden administration "will take all necessary actions to defend the United States, our troops, and our interests."
Iran's foreign ministry has denied involvement in the attack, saying the militants do not take orders from Tehran.
"The Islamic Republic has no involvement in the resistance groups' decisions on the way they support the Palestinian nation or defend themselves and the people of their countries in the face of any aggression and occupation," Iran Foreign Ministry spokesman Nasser Kanaani said in a statement Monday.
When asked by about Iran's statement, U.S. National Security Council spokesperson John Kirby would not say whether or not the White House believes the Islamic Republic was involved. But Kirby said Tehran supports the militants and provides them with resources.
"We're not looking for a war with Iran," Kirby told reporters at the White House Monday. "We're not looking to escalate the tensions any more than they already have been escalating."
'Critical inflection point'
The Islamic Resistance in Iraq claimed responsibility for the weekend drone attack on the Jordan-Syria border alongside attacks on two other bases, pledging support for the "steadfast Palestinian people in the Gaza Strip."
The attack marked another escalation in the Middle East, where tensions have soared since Hamas launched on unprecedented terror attack on Oct. 7 against Israel that killed some 1,200 people. Israel declared war in response and its military operation in Gaza has killed more than 26,000 Palestinians.
"It's a critical inflection point for the Biden administration because we really have to see whether he will have a serious escalatory response to this attack," Croft told CNBC.
The deadly attack on U.S. troops comes on the heels of attacks by Yemen-based Houthi rebels on an oil tanker transiting the Red Sea on Friday. A petroleum products tanker vessel, operated on behalf of Trafigura, caught fire after it was struck by a missile in the Gulf of Aden.
Though oil prices have largely had a muted response to the conflict in the Middle East so far, Croft said that would change if a confrontation between the U.S. and Iran lead to a disruption in the Strait of Hormuz, a crucial choke point for crude supplies.
"While you can divert ships away from the Red Sea, if this were to spread to the Straits of Hormuz, an all important waterway, there is not an easy way to divert ships out of that important chokepoint," Croft said.