KEY POINTS
- Israel’s strike left Tehran’s oil facilities untouched.
- Analysts predict oil prices to fall as tensions ease.
- Iran signals limited damage, keeping markets stable.
Oil prices are forecasted to fall when trading resumes on Monday, as Israel’s retaliatory strikes on Iran over the weekend avoided Tehran’s oil and nuclear infrastructure, leaving energy supplies unaffected, according to analysts.
Israel strikes avoid Tehran’s oil facilities, easing concerns
Brent and U.S. West Texas Intermediate (WTI) crude futures had surged by 4% last week amid volatile trading, driven by uncertainty around Israel’s potential response to Iran’s missile strike on Oct. 1 and the upcoming U.S. elections. The increase reflected concerns about the risk of disruption in global oil supplies if the conflict between the two nations escalated further. In a pre-dawn operation on Saturday, Israeli jets completed three waves of airstrikes targeting missile manufacturing sites and other military installations near Tehran and western Iran. This marked the latest confrontation between the Middle Eastern adversaries.
“The market can breathe a big sigh of relief; the known unknown that was Israel’s eventual response to Iran has been resolved,” said Harry Tchilinguirian, group head of research at Onyx, in a LinkedIn post. He noted that Israel’s timing, following the departure of U.S. Secretary of State Antony Blinken, likely benefited the U.S. administration, with elections just weeks away.
Iran’s response to the strikes was restrained, as officials on Saturday downplayed the damage, describing it as limited. This tempered response added to a sense of reduced risk in the oil markets, allowing prices to potentially stabilize when trading resumes.
Iran downplays damage, avoids escalating oil conflict
“Israel’s decision not to target oil infrastructure, along with Iran’s apparent decision to refrain from escalating the conflict, removes a significant element of uncertainty from the market,” said Tony Sycamore, a market analyst with IG in Sydney. He suggested that the oil markets may experience a “buy the rumour, sell the fact” reaction, where initial expectations of conflict-driven price spikes settle once the situation becomes clearer. Sycamore added that WTI prices could return to around $70 per barrel as markets adjust.
According to Reuters, Tchilinguirian also projected that the geopolitical risk premium embedded in oil prices would dissipate rapidly. He anticipated Brent crude could fall back to the $74–$75 range as uncertainty eases. Similarly, UBS commodity analyst Giovanni Staunovo expects a price drop, noting that Israel’s limited response has kept market fears in check.
While analysts agree that the immediate threat to oil supplies appears contained, they will continue monitoring for potential shifts, given the underlying tensions. For now, the market is expected to respond positively to the restraint shown, allowing prices to decline in the short term.
