Oil declines after an Iranian attack on Israel

Oil prices dropped as Asian markets opened on Monday, as market participants reduced risk premiums following an Iranian attack on Israel late Saturday, which the Israeli government stated caused limited damage.

By 1256 GMT, Brent crude futures for June delivery declined by 24 cents to $90.21 a barrel, while West Texas Intermediate crude futures for May delivery fell by 38 cents to $85.28 a barrel.

The attack, involving over 300 missiles and drones, marked the first targeting of Israel from another country in over three decades. It raised concerns about a broader regional conflict impacting oil movement across the Middle East.

Despite the anticipation of an Iranian response to the consulate targeting, oil prices surged on Friday, reaching their highest levels since October. However, they ended the week down one percent after the International Energy Agency revised its oil demand growth forecast for the year.

Analysts had widely expected at least a short-term price increase following the attack, despite the limited damage inflicted on Israel.

Jorge Leon, senior vice president at Rystad Energy, described the attack as a “dangerous and unprecedented development in an already volatile region.”

Longer-term impacts on prices resulting from the escalation would likely necessitate significant supply disruptions, such as shipping restrictions in the Strait of Hormuz near Iran.

Thus far, the conflict between Israel and Hamas has had minimal tangible impact on oil supplies.