NEW YORK: Oil prices fell more than a dollar a barrel on Monday as China’s ailing property sector sparked demand worries, causing traders to reassess the supply risk premium from escalating tensions in the Middle East.

Brent crude futures were down 62 cents to $82.93 a barrel at 1430 GMT, while US West Texas Intermediate crude futures were down 59 cents to $77.42.

Both benchmarks gained about 1.5% earlier on Monday, after a fuel tanker was struck by a missile in the Red Sea and US troops were attacked in Jordan near the Syrian border, marking a major escalation of tensions that have engulfed the Middle East. However, prices have since retreated as attention shifted to China, the world’s largest oil importer, where a real estate crisis deepened with a Hong Kong court ordering the liquidation of property giant China Evergrande Group.

“The situation in China is the biggest headwind to the whole market, that is why the market keeps backing off from the war risk premium,” said John Kilduff, partner at Again Capital LLC.

Market participants were also questioning how much the risk premium should be as oil supplies have not yet been directly affected by the Middle East crisis.

“Currently we are seeing a premium of around $10 a barrel when it should really just be $3 or $4 based on true petroleum demand fundamentals,” said Gary Cunnigham, director at energy advisory firm Tradition Energy.

Meanwhile, lingering high interest rates were also in focus after European Central Bank policymakers were unable to reach a consensus on Monday over when interest rates should be cut.

Russia, meanwhile, is likely to cut exports of naphtha, a petrochemical feedstock, by between 127,500 and 136,000 barrels per day - about a third of its total exports - after fires disrupted operations at Baltic and Black Sea refineries, according to traders and LSEG ship-tracking data.