Oil prices decline as risk premium eases following Iran attack
Oil prices saw a downward drift on Monday, as the market seemed to minimize concerns about a wider regional conflict following Iran’s weekend attack on Israel.
Brent futures for June delivery dropped by 81 cents, approximately 0.9%, reaching $89.64 per barrel by 1335 GMT, while West Texas Intermediate (WTI) futures for May delivery dipped by 69 cents, about 0.8%, settling at $84.97. Oil benchmarks had surged on Friday in anticipation of Iran’s retaliatory action, pushing prices to their highest levels since October.
Also read: Crude oil prices can hit $100 a barrel if Iran-Israel tensions escalate, say experts
“Crude oil dipped around $85 after Israel successfully defended itself from Iran’s large-scale air attack over the weekend, and the US underlined its desire to prevent a larger Middle East conflict. The Iranian strike did minimal damage in Israel. If the crisis does not escalate to a point that creates supply disruptions, then there will be downside move over time, but only once it becomes clear Israel has chosen a measured response,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
He further added, “We are expecting WTI crude oil will be in range of $80 to $90. On MCX platform Rs6900 will act as major support level, only below this level, it will come in negative trend.”
Iran’s attack comprised over 300 missiles and drones, marking the first attack on Israel by another nation in over three decades. This event has sparked concerns about a wider regional conflict that could impact oil traffic across the Middle East.
Kpler analyst Viktor Katona noted that Iran’s declaration of considering its retaliation concluded has eased geopolitical tensions, while John Evans from oil broker PVM described the Iranian drone and missile strike as one of the most anticipated global events in recent memory.
The attack, labeled by Iran as retaliation for an airstrike on its Damascus consulate, resulted in minimal damage, with Israel’s Iron Dome defense system intercepting several missiles.
“The likelihood of an attack was largely factored into market expectations in the days leading up to it. Moreover, the limited damage and absence of casualties suggest that Israel’s response may be more restrained,” Warren Patterson, ING’s head of commodities strategy, was quoted as saying by Reuters.
Also read: Oil prices subdued, energy security concerns escalate on West Asia tensions
Iran, a significant member of the Organization of the Petroleum Exporting Countries (OPEC), produces over 3 million barrels per day (bpd) of crude oil. Despite ongoing Middle East hostilities, particularly focused on the Israel-Hamas conflict in Gaza, there has been minimal discernible impact on oil supply thus far.
“Crude prices trended weak below 85$ in WTI as war tensions were seen neutral as of now between IRAN & Israel after weekend escalated tension were seen high which had last week kept prices high. As of now there is not a major reaction in Crude price on middle east war as there isn’t and supply constraint signs from Iran. Range of Crude is seen lower towards 6900rs in MCX as selling is seen on rises near 7125,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
(With inputs from Reuters)
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Published: 15 Apr 2024, 10:25 PM IST
