US oil fell by as much as $1.05 to $75.30 after Britain said that it had foiled a plan to blow up an aircraft in trans-Atlantic flight. Security in Britain and the United States has been stepped up.
There was a simulataneous rise in safe haven bonds and fall in stock markets. Equity markets also fell as investors shifted to government bonds.
The news managed to rein in oil prices that had risen after the shutting down of the Prudhoe Bay Field production.
Energy portfolio manager, Craig Pennington believes that at times of uncertainty people become risk averse and that causes a broader sell-off resulting in the price shift.
Oil demand may be further affected if people's confidence suffers. US gasoline and heating oil fell down but these might be temporary effects with the big question being what the oil demand situation will be like.
Terrorism concerns and the need for the security of supply premium in the oil market might keep the market balanced.
Oil has risen by 25 percent this year due to the war in Lebanon, supply disruptions in Nigeria and Iraq and the uncertainties over Iran's nuclear program.
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