**Oil Prices Plunge Over 4% as Supply Fears Ease After Israeli Assurance**

Oil prices experienced a significant drop of over 4% on Tuesday, influenced by a report indicating that Israel would refrain from targeting Iran's oil production. This news, coupled with a forecasted supply glut by the International Energy Agency (IEA), also contributed to the decline. West Texas Intermediate (WTI) settled at $70.58 per barrel, while Brent, the global benchmark, closed at $74.25 per barrel.

The drop followed a Washington Post article published on Monday, which detailed Prime Minister Benjamin Netanyahu's communication to the Biden administration. Netanyahu assured that Tel Aviv would not target Iran's nuclear or oil infrastructure in its response to a recent ballistic missile attack by Iran. Prior to this, oil prices had seen an upward trend driven by concerns over potential Israeli strikes on Iranian oil fields. Despite these reassurances, Israel emphasized to Reuters that its actions against Iran would ultimately be determined by its national interests, even though US opinions are considered.

Adding to the bearish sentiment, the IEA projected that global oil demand growth would slow to just under 900,000 barrels per day, with an increase of almost 1 million barrels per day anticipated in 2025. This marks a sharp decline from the higher levels of demand growth witnessed during the 2022-2023 period. The report highlighted China as a key factor in this deceleration, noting that the nation would account for around 20% of global gains in both 2024 and 2025, down significantly from nearly 70% in 2023.

"In the absence of a major disruption, the market is faced with a sizeable surplus in the new year," the IEA stated. Patrick De Haan, head of petroleum analysis at GasBuddy, echoed this sentiment, suggesting a bearish outlook for oil prices given the current state of China's economy and the non-escalation of Middle East tensions.

Further pressure on prices came from China's Finance Minister, whose weekend comments lacked specific details on the size of stimulus measures that would boost crude demand from the world's largest oil importer. Additionally, the Organization of the Petroleum Exporting Countries (OPEC) lowered its demand forecast for the third consecutive month on Monday, mainly due to China. OPEC now expects demand to grow by 1.9 million barrels per day this year, down from a previous forecast of 2 million barrels per day.

Overall, current market conditions and geopolitical factors have combined to create a challenging environment for oil prices, with significant implications for global demand and supply dynamics.