Oil prices lower after Iran attack on Israel

Following Iran's reprisal attack on Israel, oil prices drop, though Brent crude remains close to $90/barrel. Analysts observe potential impact

Oil prices experienced a decline on Monday following Iran's retaliatory strike on Israel over the weekend. Despite the drop, Brent crude, an important international oil price benchmark, remained close to $90 per barrel.

 

The anticipation of action by Iran had already prompted a rise in oil prices, with Brent crude reaching nearly a six-month high last week. Analysts noted that the conflict could potentially disrupt global supply chains, prompting market watchers to closely monitor developments.

 

The fluctuation in oil prices has significant repercussions worldwide, impacting various sectors due to the widespread reliance on oil for fuel production. Concerns about disruptions in supply chains and rising energy costs have contributed to inflationary pressures globally in recent years.

 

Israeli Defence Minister Yoav Gallant's remarks indicating that the confrontation with Iran is ongoing underscore the uncertainty surrounding the situation. The fallout from Iran's attack and Israel's response will likely shape market dynamics in the coming days and weeks.

 

While Brent crude briefly touched $92.18 a barrel last week, it retreated to around $89.50 on Monday. Additionally, the price of gold, often viewed as a safe-haven asset during times of uncertainty, also saw a decline after reaching a record high on Friday.

 

Energy analysts suggest that the current oil market sentiment indicates no immediate supply threats. However, expectations of potential volatility persist, especially if Israel mounts a robust response to Iran's actions.

 

Market reactions in the Asia-Pacific region and the UK reflect investor apprehension about the attack's implications. Concerns persist about the potential escalation of conflict in the Middle East and its impact on energy prices and inflationary pressures.

 

The situation highlights the strategic importance of the Strait of Hormuz, a critical shipping route through which a significant portion of the world's oil supply transits. Any disruptions in shipping through the strait could have profound implications for global oil markets, particularly for OPEC members reliant on it for oil exports.