Oil slumps more than 4% after Iran downplays Israeli strikes
Shafaq News/Oil prices tumbled more than $3 a barrel on Monday after Israel's retaliatorystrike on Iran over the weekend bypassed Tehran's oil and nuclear facilitiesand did not disrupt energy supplies, easing geopolitical tensions in the MiddleEast.
Both Brentand U.S. West Texas Intermediate crude futures hit their lowest levels sinceOct. 1 at the open. By 0514 GMT, Brent was at $72.59 a barrel, down $3.46, or4.6%, while WTI slipped $3.37, or 4.7%, to $68.41 a barrel.
Thebenchmarks gained 4% last week in volatile trade as markets priced inuncertainty around the extent of Israel's response to the Iranian missileattack on Oct. 1 and the U.S. election next month.
Scores ofIsraeli jets completed three waves of strikes before dawn on Saturday againstmissile factories and other sites near Tehran and in western Iran, in thelatest exchange in the escalating conflict between the Middle Eastern rivals.
Thegeopolitical risk premium that had built in oil prices in anticipation ofIsrael's retaliatory attack came off, analysts said.
"Themore limited nature of the strikes, including avoiding oil infrastructure, haveraised hopes for a de-escalatory pathway, which has seen the risk premium comeoff a few dollars a barrel," Saul Kavonic, a Sydney-based energy analystat MST Marquee, said.
"Themarket will be watching closely for confirmation Iran won't counter attack incoming weeks, which could see the risk premium rise again."
CommonwealthBank of Australia analyst Vivek Dhar expects market attention to turn toceasefire talks between Israel and Iran-backed militant group Hamas thatresumed over weekend.
"DespiteIsrael’s choice of a low aggression response to Iran, we have doubts thatIsrael and Iran’s proxies (i.e. Hamas and Hezbollah) are on track for anenduring ceasefire," he said in a note.
Citi loweredits Brent price target in the next three months to $70 a barrel from $74,factoring in a lower risk premium in the near term, its analysts led by MaxLayton said in a note.
Analyst TimEvans at U.S.-based Evans Energy said in a note: "We think this leaves themarket at least somewhat undervalued, with some risk OPEC+ producers may pushback the planned increase in output targets beyond December."
In October,the Organization of the Petroleum Exporting Countries and their allies, a groupknown as OPEC+, kept their oil output policy unchanged including a plan tostart raising output from December. The group will meet on Dec. 1 ahead of afull meeting of OPEC+.
(Reuters)
