Oil Markets Signal Relief After Contained Middle East Action
International crude markets experienced a dramatic downturn Monday as investors responded to Israel’s limited military action against Iran over the weekend. The carefully targeted strikes, which steered clear of Iran’s energy and nuclear installations, triggered a significant sell-off in global oil markets.
Trading data showed both major oil benchmarks retreating to levels not seen since early October. By early afternoon, Brent crude plummeted more than 6% to a low of $70.82 per barrel, while its American counterpart, West Texas Intermediate, shed nearly 7% to reach as low as $66.92.
The sharp decline marks a striking reversal from last week’s market sentiment, when uncertainty over Israel’s potential response to Iran’s October 1 missile attack had driven prices up by 4%. Israel’s measured approach, executing three precise aerial strikes near Tehran and in western Iran, largely calmed market fears of broader regional conflict.
Market observers suggest the Biden administration played a key role in shaping Israel’s moderate response. Meanwhile, investment bank Citi has adjusted its market outlook, lowering its Brent crude forecast to $70 per barrel for the upcoming quarter, down from its previous $74 projection.
Despite the immediate market relief, some analysts remain cautious about long-term regional stability. Commonwealth Bank of Australia’s Vivek Dhar warned that tensions between Israel and Iranian-backed groups Hamas and Hezbollah could still threaten market stability.
Industry attention is now pivoting to OPEC+ dynamics, with particular focus on the organization’s December 1 meeting. The group’s upcoming decisions could prove crucial for market direction, especially given the current combination of geopolitical uncertainties and economic pressures affecting global oil demand.
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