Oil drops 3% as Middle East supply concerns ease

The news: Oil prices skidded overnight as fears eased that the Israel-Hamas war would disrupt supply from the region, with investors also cautious ahead of this week's US Federal Reserve meeting.

The numbers: Brent crude futures settled at USD87.45 a barrel, down 3.35%, while U.S. West Texas Intermediate (WTI) crude finished at USD82.31 a barrel, down 3.78%.

The context: Prices had jumped last week after Israel stepped up ground incursions into Gaza, stoking worries the conflict could expand in a region that accounts for a third of global oil output. However, that concern was fading on Monday, analysts said. Investors are also focused on the outcome of Wednesday's Federal Reserve meeting, as well as on what earnings from the likes of tech giant Apple might indicate regarding the prospects for an economic slowdown. The Fed is widely expected to keep interest rates unchanged, while the central banks of Britain and Japan are also set to review their policies this week.