As the Israeli army spared oil installations when it attacked Iran on Saturday, oil prices were able to fall, thus avoiding a major disruption in the supply of crude.
After Israeli strikes in Iran which spared energy sites, oil prices fell by more than 4% on Monday in early trade in Asia. Around 12:30 a.m., the price of a barrel of Brent from the North Sea, for delivery in December, therefore fell by 4.05% and now costs $72.97. Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery the same month, plunged 4.19%, to $68.77. Enough to immediately allay fears of a major disruption in the supply of crude oil.
The market appears relieved that the attack launched on Saturday by Israel against Iran, more restricted than expected, targeted missile manufacturing facilities while sparing essential sites for the production of black gold in the country.
This has been a major fear among operators in recent days, who feared major disruptions in global supply if necessary – a prospect that had pushed oil prices up last week.
The fear of a peaceful escalation
«Israel's strike, which carefully avoided energy sites, eased fears of a full-scale conflict with Iran, and Iran's response was telling, downplaying the impact of the attack (. ..) enough to deflate the geopolitical risk premium which recently supported oil prices“, explained Stephen Innes, analyst at SPI Asset Management.
For him, the fall could further worsen, in a market driven for weeks by the exacerbation of geopolitical tensions in the Middle East. “If tensions continue to ease further or peace talks unexpectedly gain traction (in the Middle East), we could see oil fall to $60 a barrel as traders once again focus on the glut of supply by 2025, particularly if economic recovery measures in China are not up to par“, he warns.
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In fact, the oil market is still penalized by the still gloomy economic outlook in China, the leading crude importer country, despite the recovery measures recently announced by Beijing but considered too lacking in detail to reassure investors.
Other factors also contribute to weighing on prices: abundant stocks in the United States, as well as the policy of Opec+ countries (Organization of the Petroleum Exporting Countries and its allies), some of which are preparing to reverse their voluntary reductions in production to increase their supply.