Oil prices likely to fall after Israel shows restraint in strikes on Iran
Shafaq News/ Oil prices are expected to fallwhen trading resumes on Monday as Israel's retaliatory strike on Iran over theweekend bypassed Tehran's oil and nuclear infrastructure and did not disruptenergy supplies, analysts said.
Brent and U.S. West Texas Intermediate crudefutures gained 4% last week in volatile trade as markets priced in uncertaintyaround the extent of Israel's response to the Iranian missile attack on Oct. 1and the U.S. election next month.
Scores of Israeli jets completed three waves ofstrikes before dawn on Saturday against missile factories and other sites nearTehran and in western Iran, in the latest exchange in the escalating conflictbetween the Middle East rivals.
"The market can breathe a big sigh of relief;the known unknown that was Israel's eventual response to Iran has beenresolved," Harry Tchilinguirian, group head of research at Onyx said onLinkedIn.
"Israel attacked after the departure ofU.S. Secretary of State Antony Blinken, and the U.S. administration could nothave hoped for a better outcome with U.S. elections less than two weeksaway."
Iran on Saturday played down Israel's overnightair attack against Iranian military targets, saying it caused only limiteddamage.
"Israel's not attacking oil infrastructure,and reports that Iran won't respond to the strike remove an element ofuncertainty," Tony Sycamore, IG market analyst in Sydney, said.
"It's very likely we see a 'buy the rumour,sell the fact' type reaction when the crude oil futures markets reopentomorrow," he said, adding that WTI may return to $70 a barrel level.
Tchilinguirian expects geopolitical risk premiumthat had been built into oil prices to deflate rapidly with Brent heading backtowards $74-$75 a barrel.
UBS commodity analyst Giovanni Staunovo alsoexpects oil prices to be depressed on Monday as Israel's response to Iran'sattack appeared to have been restrained.
"But I would expect such downside reactionto be only temporary, as I believe the market didn't price a large riskpremium," he added.
(Reuters)
