Tel Aviv, Israel – Oil prices experienced a decline in early Asian trading following Iran’s retaliatory attack on Israel over the weekend. Despite the dip, Brent crude, a significant oil price benchmark, remained close to $90 a barrel on Monday morning. The anticipation of action by Iran had previously driven prices up, with Brent crude approaching a six-month high the previous week.
Israeli Defence Minister Yoav Gallant hinted that the confrontation with Iran is far from over. Energy analyst Vandana Hari noted that the oil market currently sees no immediate need to consider additional supply threats. While Brent crude may see a drop below $90, a substantial pullback seems unlikely as traders remain vigilant about the potential risks posed by the ongoing conflicts in Gaza and Ukraine.
Analysts highlight that the reaction from Israel in response to the attack will play a crucial role in shaping global markets in the days and weeks ahead. Peter McGuire from trading platform XM.com warned of potential volatility, especially if Israel were to initiate a counter-move, causing energy markets to surge upwards.
In addition to the impact on oil prices, share markets in the Asia-Pacific region also experienced a decline on Monday as investors weighed the implications of the attack. Major indexes like the Hang Seng in Hong Kong, Japan’s Nikkei, and South Korea’s Kospi were all down by more than 1% during morning trading.
Iran’s drone and missile attacks on Israel followed a vow for retaliation after the attack on its consulate in Damascus earlier in April. While Israel has not officially claimed responsibility for the consulate strike, it is widely believed to have orchestrated it.
The price of Brent crude briefly touched $92.18 a barrel last week, its highest level since October, before settling back to $90.45. As the seventh-largest oil producer globally and a key member of the OPEC oil producers’ cartel, Iran’s actions have implications for the oil market moving forward.
Analysts emphasize that a critical issue affecting oil prices in the future is whether shipping through the crucial Strait of Hormuz will be disrupted. The Strait, located between Oman and Iran, is a vital shipping route through which approximately 20% of the world’s total oil supply passes. Notably, OPEC members like Saudi Arabia, Iran, the UAE, Kuwait, and Iraq rely heavily on the Strait for transporting the oil they export.