HOUSTON: Oil prices tumbled 6% on Monday, or more than $4 a barrel, after Saturday’s retaliatory strike by Israel against Iran’s military bypassed oil and nuclear facilities, not disrupting energy supplies.
Brent futures settled at $71.42 a barrel, down $4.63 or 6.09%. WTI US crude futures finished at $67.38 a barrel, $4.40 or 6.13%.
Both Brent and US West Texas Intermediate crude futures hit their lowest since Oct. 1 at the open.
“Obviously, this is a perfect example of a headline-driven market,” said Phil Flynn, senior analyst at Price Futures Group. “We still have a lot of geopolitical risk.”
Last week, the benchmarks gained 4% in volatile trade on uncertainty over the looming US election and the extent of Israel’s expected response to the Iranian missile attack of Oct. 1. On Saturday, scores of Israeli jets completed three waves of strikes before dawn against missile factories and other sites near Tehran and in western Iran, the latest exchange between the Middle Eastern rivals.
The attacks were more tailored toward military targets, easing fears that Israel might attack Iran’s nuclear facilities or oil infrastructure.
Citi lowered its Brent price target for the next three months to $70 a barrel from $74, factoring in a lower risk premium in the near term, analysts led by Max Layton said in a note.
The Organization of the Petroleum Exporting Countries and its allies in OPEC+ kept oil output policy unchanged last month, including a plan to start raising output from December. The group will meet on Dec. 1 ahead of a full meeting of OPEC+.
Tudor, Pickering Holt analyst Matt Portillo said WTI could trade much lower in the coming year.
“Absent a flare-up in the Middle East, our base case for WTI in 2025 remains $65 a barrel, with a bias lower if OPEC+ doesn’t show significant constraint on returning volumes to the market,” Portillo said. Tensions remain high following the attack, however, and Iran will “use all available tools” to respond to Israel’s weekend attack, Iranian Foreign Ministry spokesperson Esmaeil Baghaei said on Monday.
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