New York, United States – Oil markets showed a minimal response as they reopened after Iran’s recent military strike on Israel. Traders appeared unfazed by fears of potential escalation into a full-scale war that could disrupt oil supplies from the region. Brent crude, the global benchmark, remained steady at $90.45 a barrel at the start of trading in Asia on Monday morning, while West Texas Intermediate, the US marker, also showed little change at $85.72 a barrel.
The subdued market reaction indicated confidence that the impact of the strike would be contained. Iran stated that it believed the situation to be “concluded,” and Washington aimed to reduce tensions. Experts pointed out that the calibrated nature of the attacks and the advanced warning provided ahead of time played a role in easing market concerns.
President Joe Biden urged Israel to respond in a measured manner, emphasizing the need for caution. Iran warned of a more severe response should Israel make another mistake, highlighting the potential for further escalation. Analysts cautioned that a strong Israeli retaliation could lead to a destabilizing cycle of retaliation, impacting oil supplies from the region and driving prices higher.
The recent spike in oil prices followed the attack on Damascus, with markets assessing the possibility of escalating conflict disrupting Gulf supplies. Observers expressed concern that a severe Israeli response could push prices above $100 per barrel. An escalation of the conflict could tighten the global oil market further as demand rises in major economies like the US and China.
Any increase in oil prices could pose challenges for the Biden administration, struggling to navigate high inflation levels. Rising crude prices could worsen already elevated pump prices, impacting voters ahead of the upcoming elections. With average US petrol prices at $3.63 a gallon, a geopolitical spike in oil prices would present challenges for both the economy and the president’s re-election prospects.