Oil prices plunge after Israeli airstrike misses Iranian oil facilities
After initially falling more than 5%, West Texas Intermediate crude (CL00) fell 4.4% to $68.68 a barrel by 7:20 p.m. Eastern Time, while Brent crude (BRN00), the global benchmark, fell 4% to $72.55.
Oil futures rose last week on concerns that an impending Israeli strike, in retaliation for Iran’s missile strikes on Israel on Oct. 1, would target Iranian oil facilities and potentially spark a wider war in the Middle East. Saturday’s strike by Israeli jets and missiles instead targeted Iranian air defense sites and military infrastructure. The smaller scale of the attack led some experts to speculate that tensions would not escalate significantly.
"The Israeli strikes did not hit energy infrastructure and were limited in scope. The limited strikes will likely ease fears of a direct conflict with Iran and oil prices will likely fall when futures begin trading on Sunday," Jay Hatfield, CEO of Infrastructure Capital Advisors, said in a note Sunday. "We expect oil prices to return to our estimated fair value range of $75-$95 as we head into the summer and travel season."
But Phil Flynn, senior market analyst at Price Futures Group, cautioned that concerns about Persian Gulf oil are not over. "The bottom line for oil is that the immediate threat of supply disruption has been put aside for now," he said in a note Sunday. "In the bigger picture, if you think this one strike is going to end the hostilities, I don't think so... Even though Iran says they won't respond, I would assume that Iran will try to get their proxies to regroup and respond in some way."
Source: Bloomberg
