09:15 AM EDT, 10/15/2024 (MT Newswires) -- Oil traded sharply lower early on Tuesday after reports Israel won't target oil infrastructure when it responds to that country's Oct.1 missile strike and as the International Energy Agency (IEA) cut its 2024 demand estimate and forecast a supply surplus coming next year.

West Texas Intermediate crude for November delivery was last seen down US$3.20 to US$70.63 per barrel, while December Brent crude, the global benchmark, was down US$3.14 to US$74.32.

The Washington Post on Tuesday reported Israeli Prime Minister Benjamin Netanyahu told the Biden Administration Israel will concentrate on attacking Iranian military facilities when it responds to Iran's attack, easing concerns the strike could impact Iran's 1.7-million barrels per day of oil exports and worries Iran would be drawn into a wider Middle Eastern war.

"The next moves will hinge on whether the market believes this new conciliatory political speak, and if it does and sees Israel behaving in accordance with it, this will not be the end of lower prices," PVM Oil Associates noted.

The IEA again cut its estimate for 2024 demand growth in its October Oil Market Report, seeing demand at 862,000 barrels per day over 2023 levels, down from its 903,000 bpd September estimate. The agency slightly raised its 2025 demand growth estimate to one-million bpd but warned rising non-OPEC supply and weak Chinese demand will result in rising inventories next year.

"For now, supply keeps flowing, and in the absence of a major disruption, the market is faced with a sizeable surplus in the new year," the IEA report noted.