Oil prices experienced a decline on Monday as the market reassessed the risk of a broader regional conflict following Iran’s weekend attack on Israel. Brent LcOc1 futures for June delivery dropped by 70 cents (approximately 0.8%) to $89.75 a barrel by 1133 GMT, while West Texas Intermediate (WTI) CLc1 futures for May delivery were down 74 cents (about 0.9%) at $84.92.
The anticipation of Iran’s retaliatory attack had initially driven oil benchmarks higher on Friday, leading to prices reaching their highest levels since October. However, Iran’s attack, which involved over 300 missiles and drones and marked the first attack on Israel by another country in over three decades, did not escalate into a broader regional conflict affecting oil traffic through the Middle East.
Analysts noted that Iran’s announcement of considering its retaliation to be over has contributed to lowering the geopolitical temperature. The attack, considered by some as a highly anticipated event, resulted in only modest damage, with Israel’s Iron Dome defense system intercepting several missiles.
While Iran is a major producer within the Organization of the Petroleum Exporting Countries (OPEC), the hostilities in the Middle East, particularly the Israel-Hamas conflict in Gaza, have had minimal tangible impact on oil supply thus far. Analysts emphasized that the potential downside risk to oil prices would become more apparent if Israel’s response remains measured and the crisis does not escalate to the point of creating supply disruptions.