Oil prices fell by about 5% on Monday after Israel’s strike on Iran over the weekend avoided Tehran’s oil and nuclear facilities and did not disrupt energy supplies, easing geopolitical tension in the Middle East.
Brent crude futures and US West Texas Intermediate crude recorded their lowest levels since the first of last October at the opening, and a barrel of Brent fell 5% to $72.24 at the time of preparing this report, and a barrel of American oil fell 5.32% to $68.
The two benchmarks rose 4% last week in volatile trading, with markets affected by uncertainty about the size of Israel’s response to the Iranian missile attack on October 1 and the US elections next month.
Israeli strike
Dozens of Israeli warplanes carried out three waves of strikes before dawn last Saturday, targeting missile factories and other sites near Tehran and in western Iran, in the latest exchange of bombing in the escalating conflict between the two countries.
Analysts reported a decline in the costs of geopolitical risks that increased oil prices in anticipation of the Israeli attack.
“The limited nature of the strikes, including avoiding oil infrastructure, raised hopes for a de-escalation path, bringing the risk premium down a few dollars a barrel,” said MST Markey energy analyst Saul Kavonic.
“The market will be closely watching confirmation that Iran will not launch a counterattack in the coming weeks, which could lead to risk costs rising again,” he added.
This October, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, the group known as OPEC Plus, kept its oil production policy unchanged, including a plan to begin increasing production starting next December.
The group’s joint ministerial committee will meet on December 1, ahead of the full OPEC Plus meeting.
