Oil prices down after Iran attacked Israel

• Brent crude, a key international benchmark, traded lower but remained at nearly $90 a barrel.
• The conflict could impact global supply chains, contributing to the higher cost of living.
• Oil price fluctuations can have ripple effects, as countries heavily rely on the commodity for fuel production.

On Monday, oil prices fell after Iran launched a reprisal attack on Israel over the weekend. Brent crude, a crucial benchmark for international oil prices, traded lower but remained close to $90 a barrel on Monday morning. The anticipation of action by Iran had already driven prices up, with Brent crude nearing a six-month high last week. Analysts noted that the markets would closely monitor how the conflict could impact global supply chains.

Oil price fluctuations can create ripple effects across the world because countries heavily rely on the commodity to produce fuels such as petrol and diesel. Fuel and energy prices have significantly contributed to the higher cost of living worldwide in recent years.

When Russia invaded Ukraine in 2022, oil prices soared to $120 a barrel due to supply fears as Western nations imposed sanctions on Russia, one of the world’s major oil exporters. The increase resulted in higher prices at the pumps and prompted countless businesses to adjust their prices to cover higher costs.

Analysts emphasized that Israel’s reaction to the attack would be crucial for global markets in the days and weeks ahead.

Israeli Defense Minister Yoav Gallant has stated that the confrontation with Iran “is not over yet”.

His comments followed Iran’s launch of drones and missiles toward Israel over the weekend, following a vow of retaliation for an attack on its consulate in the Syrian capital Damascus on 1 April. Although Israel has not claimed responsibility for the consulate strike, it is widely believed to have been behind it.

At the end of last week, Brent crude reached $92.18 a barrel, its highest point since October. However, early on Monday, it retreated to around $89.70.

While oil prices experienced a slight dip, the price of gold increased, hovering near record highs and trading close to $2,400 an ounce.

Gold, often perceived as a safe investment during times of uncertainty, sharply rose ahead of the weekend.

Energy analyst Vandana Hari stated that the decline in oil prices indicated that “clearly, the oil market does not see the need to factor in any additional supply threat at this point”.

However, Peter McGuire from trading platform XM.com expressed his expectation of volatility in the energy market and predicted that oil prices would surge if Israel responded strongly to Iran’s move.

However, April LaRusse, head of Insight Investment, suggested that markets would likely “trade sideways until we have more information”.

She told the private news agency in today’s program, “Unfortunately, this situation in the Middle East has been ongoing for some time, and the longer there is geopolitical tension, the more markets wait to see, and there isn’t a panic reaction as the first move.”

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