Concerns regarding demand in China also contributed to the decline, as Beijing did not announce any new economic stimulus measures during a weekend briefing, raising doubts about its struggling economy.
Most major stock markets experienced losses, with declines noted in Shanghai, Hong Kong, and London, while Frankfurt saw an increase due to a report highlighting a rebound in investor confidence.
The key US oil contract, West Texas Intermediate, dropped more than five percent to $69.71 per barrel. Similarly, the European benchmark Brent North Sea crude fell to $73.34 before recovering some of its losses.
The price drop followed a Washington Post report stating that Netanyahu had committed to focusing on Iran's military rather than its oil and nuclear sectors.
Earlier this month, Iran's missile strikes on Israel had caused crude prices to surge due to fears of potential retaliatory actions disrupting oil supplies.
According to Matt Britzman, a senior equity analyst at Hargreaves Lansdown, Tuesday's developments have "alleviated some of that supply concern."
“With the geopolitical risk-premium falling, prices are once again being led by the struggling demand picture,” he added.
The International Energy Agency reported on Tuesday that the global oil markets continue to have an adequate supply.
In its monthly update, the Paris-based agency stated that the conclusion of the Libyan oil blockade, coupled with reduced demand and relatively moderate production losses resulting from hurricanes in the US Gulf Coast, have contributed to stabilizing the markets.
China woes
The decline in oil prices is being exacerbated by worries that China, the largest crude oil importer globally, is struggling to revive its sluggish economy.
Investors are feeling let down due to the insufficient information provided by China's finance minister, Lan Fo’an, regarding the magnitude and scope of the economic stimulus initiatives intended to boost growth in the world's second-largest economy.
Additionally, disappointing trade and inflation figures from China for September have underscored the urgent need for economic support.
“Everywhere you look, China is in desperate need for fiscal support, with very weak domestic demand alongside an economy facing deflationary pressures and softer global demand,” said Rodrigo Catril, a senior strategist at National Australia Bank.
Hong Kong's stock market experienced a decline of nearly four percent on Tuesday, while Shanghai fell by 2.5 percent. In contrast, Tokyo saw gains as traders returned from a three-day weekend.
By midday, London was also down, despite official statistics indicating a decrease in both unemployment and wage growth in Britain, which has led analysts to anticipate that the Bank of England may begin cutting interest rates next month.
In Paris, stocks fell, whereas Frankfurt's market rose in anticipation of an expected interest rate cut from the European Central Bank on Thursday, as concerns about inflation in the eurozone diminish and worries about slow growth increase.
A survey released on Tuesday revealed that German investor confidence improved more than anticipated in October, as the possibility of lower interest rates offers a glimmer of optimism for businesses in Europe’s largest economy.
On Wall Street, the Dow and S&P 500 reached new record highs on Monday, coinciding with the start of the third-quarter earnings reporting season.
Key figures around 1030 GMT
- West Texas Intermediate: DOWN 5.1 percent at $70.04 per barrel
- Brent North Sea Crude: DOWN 4.9 percent at $73.66 per barrel
- London – FTSE 100: DOWN 0.6 percent at 8,246.51 points
- Paris – CAC 40: DOWN 0.8 percent at 7,542.68
- Frankfurt – DAX: UP 0.3 percent at 19,557.50
- Hong Kong – Hang Seng Index: DOWN 3.7 percent at 20,318.79 (close)
- Shanghai – Composite: DOWN 2.5 percent at 3,201.29 (close)
- Tokyo – Nikkei 225: UP 0.8 percent at 39,910.55 (close)
- New York – Dow: UP 0.5 percent at 43,065.22 points (close)
- Euro/dollar: DOWN at $1.0909 from $1.0911 on Monday
- Pound/dollar: UP at $1.3088 from $1.3060
- Dollar/yen: DOWN at 149.07 yen from 149.74 yen
- Euro/pound: DOWN at 83.00 pence from 83.51 pence