After the Israeli strike on Iran at the beginning of the week didn’t hit Tehran’s oil and nuclear facilities and didn’t disrupt energy supplies, oil prices fell more than three dollars per barrel on Monday. This eased geopolitical tensions in the Middle East.
At the opening, Brent and US West Texas Intermediate crude futures reached their lowest levels since October 1.
Brent crude was down $3.17, or 4.2%, to $72.88 at 23:04 GMT. To $68.65 a barrel, West Texas Intermediate crude lost $3.13, or 4.4%.
In volatile trading last week, both crudes gained 4% as markets digested uncertainty regarding the extent of Israel’s response to Iran’s missile attack on October 1 and the upcoming US elections.
In the most recent exchange of fire, dozens of Israeli warplanes launched three waves of strikes against missile factories and other locations near Tehran and in western Iran before dawn on Saturday.
According to analysts, the geopolitical risk premium that oil prices had built up in anticipation of an Israeli attack has diminished.
Saul Kavonic, an energy analyst at MST Markey, stated, “The limited nature of the strikes, including sparing oil infrastructure, has raised hopes of a path to calming the Middle East hostilities, especially if it becomes clear that Iran will not respond to the attack in the coming days.”
“But the general trend remains towards escalation and the possibility of another round of attacks, leading to higher oil prices, has never been higher,” he added, “despite the volatility in the news of the conflict in the Middle East.”
The Organization of the Petroleum Exporting Countries and its allies, OPEC+, kept their oil production policy the same in October, including a plan to start increasing output in December.
Before the full OPEC+ meeting, the group’s Joint Ministerial Committee will meet on December 1.
