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Oil prices fall after Iran attack as market draws down risk premium

Monday,   15-Apr-2024   08:26 AM (IST)

Oil prices fell at Asia's open on Monday, as market participants dialled back risk premiums following Iran's attack on Israel late on Saturday which the Israeli government said caused limited damage. Brent futures for June delivery fell 24 cents to $90.21 a barrel while West Texas Intermediate (WTI) futures for May delivery were down 38 cents at $85.28 a barrel by 1256 GMT. The attack involving more than 300 missiles and drones was the first on Israel from another country in more than three decades. It had raised concerns about a broader regional conflict affecting oil traffic through the Middle East. But the attack, which Iran called retaliation for an air strike on its Damascus consulate, caused only modest damage, with missiles shot down by Israel's Iron Dome defence system. Israel, which is at war with Iran-backed Hamas militants in Gaza, has neither confirmed nor denied it struck the consulate. While Israeli officials said the country's war cabinet was in favour of retaliation, the U.S. said it would not take part in any offensive against Iran. Global powers, other Arab nations and the UN secretary general have issued calls for restraint. Oil benchmarks had risen on Friday in anticipation of a retaliatory attack by Iran, touching their highest levels since October. But prices still ended the week down about 1% after the International Energy Agency lowered its forecast for oil demand growth this year. Despite the limited damage sustained by Israel, analysts were widely expecting at least a short-lived rally in prices this morning. Analysts said more significant and longer-lasting price effects from the escalation would require a material disruption to supply, such as constraints on shipping in the Strait of Hormuz near Iran. So far, the Israel-Hamas conflict has had little tangible impact on oil supply.