Global oil prices traded slightly lower on Monday morning despite a weekend dominated by rising tensions in the Middle East.
Brent crude, the international benchmark, fell almost 0.4% to $90 a barrel in Asian trading, while US oil futures also fell, according to LSEG data.
Market experts said the measures reflect the fact that concerns about an Iranian attack on Israel that culminated in a non-deadly strike attack using drones and missiles on Saturday, it had already been priced the previous week.
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Brent rose to near six-month highs on Friday.
More broadly, stock markets across Asia fell and the same was expected in Europe on Monday morning as investors worried about how Israel might respond to Iran’s move.
IG saw the FTSE 100 in London fall around 0.5% at the open, lowering the chances of the index reaching record levels this week.
It closed Friday with 7,999 points – just 12 less than the February 2023 peak.
Analysts said there is increasing focus on what rising oil costs would mean for the global economy.
Brent is up 17% year to date, while US crude is almost 19% higher and there are rumors that values well above $100 per barrel are likely if there are no signs of easing tensions.
from Iran seizure of an oil tanker last week, which claimed to have links to Israel, only served to fuel nervousness about the consequences for trade.
They not only extend to oil, but also to crucial shipments of liquefied natural gas (LNG), other raw materials and consumer goods, many already affected by the disruption of shipping in the Red Sea due to attacks by Iran-linked Houthi rebels.
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This week’s inflation data will show whether there has been any impact from rising shipping costs.
The additional costs risk undermining financial market expectations for interest rate cuts widely expected this summer following a large reduction in the pace of price growth witnessed at the end of the COVID pandemic and later after Russia’s invasion of Ukraine.
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Commenting on Monday’s oil price response to Iran’s attack, Warren Patterson, head of raw materials strategy at ING, said: “An attack was largely priced in in the days leading up to it.
“Also, the limited damage and the fact that there was no loss of life means that perhaps Israel’s response will be more measured.
“But clearly there is still a lot of uncertainty and it all depends on how Israel responds now.”
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