By Colleen Howe
BEIJING (Reuters) – Oil prices fell at the Asian open on Monday as market participants reduced risk premiums following Iran’s attack on Israel on Saturday night, which the Israeli government said caused limited damage. .
Brent futures for June delivery fell 24 cents to $90.21 a barrel, while West Texas Intermediate (WTI) futures for May delivery fell 38 cents to $85.28 a barrel at 1256 GMT.
The attack involving more than 300 missiles and drones was the first against Israel from another country in more than three decades. It raised concerns about a broader regional conflict affecting oil traffic through the Middle East.
But the attack, which Iran called retaliation for an airstrike on its consulate in Damascus, caused only modest damage, with missiles shot down by Israel’s Iron Dome defense system. Israel, which is at war with Iranian-backed Hamas militants in Gaza, has neither confirmed nor denied that it attacked the consulate.
Although Israeli officials said the country’s war cabinet was in favor of retaliation, the US said it would not participate in any offensive against Iran. Global powers, other Arab nations and the UN secretary-general have issued calls for restraint. .
“The Iranian retaliatory missile and drone strike against Israel yesterday morning appears sufficient in size to avenge the deaths of Iranian military personnel in Syria, without being damaging enough to trigger a further escalation in hostilities at this time,” said the market analyst at IG, Tony Sycamore, in a statement. customer note.
Oil benchmarks rose on Friday in anticipation of a retaliatory strike from Iran, reaching their highest levels since October.
But prices still ended the week down around 1%, after the International Energy Agency reduced its forecast for oil demand growth this year.
Despite the limited damage suffered by Israel, analysts expected at least a short-lived recovery in prices this morning.
The attack marks a “dangerous and unprecedented development in an already volatile region,” said Rystad Energy senior vice president Jorge Leon.
Analysts said the most significant and lasting effects of the price spike would require a material disruption to supply, such as restrictions on shipping in the Strait of Hormuz near Iran.
So far, the Israel-Hamas conflict has had little tangible impact on oil supplies.
A “less certain path for Fed rate cuts” due to persistent U.S. inflation also weighed on prices, Sycamore said. “However, in the medium term, ongoing geopolitical instability in the Middle East and Europe means all risks remain to crude oil heading towards $90.”
(Reporting by Colleen Howe; Editing by Christopher Cushing)
