World Oil Prices Declined After Israel's Attack On Iran

UNSPLASH/Ben Wicks ILLUSTRATION

JAKARTA - Oil prices fell after Israel's retaliatory attacks on Iran over the weekend, avoiding an impact on Tehran's important energy infrastructure.

Brent crude, global oil benchmarks slumped 5.8 percent on Monday, October 28 morning. Meanwhile, West Texas Intermediate, the US oil benchmark, fell 6 percent to 67 US dollars per barrel.

Israel launched a direct attack on Iran's military target on Saturday, October 26, in retaliation for a series of missiles Tehran launched on Israel earlier this month.

The attack appeared to have deliberately avoided attacks on Iranian oil fields and nuclear facilities.

Iran vowed to respond to Israeli attacks but said it did not want a broader war.

"The range of targeted attacks and the absence of retaliatory signals in the near future have seen the market take into account some geopolitical risk premiums (related to the conflict)," the analyst at Deutsche Bank wrote in a note reported by CNN.

Previous oil prices have risen since Israel began targeting the Lebanese-based militant group Hezbollah in late September, and as Iran retaliated by launching missiles at Israel.

Investors are increasingly concerned that an escalating conflict could disrupt oil flow through the important Strait of Hormuz off Iran's southern coast, which could cause oil prices to soar. This narrow waterway which is only 21 miles (34 kilometers) wide at its narrowest point is the most important point in the world's oil transit, according to the US Energy Information Administration.

About a fifth of global oil trade passes through this strait every day, according to Simone Tagliapietra, senior researcher at Brussels-based think tank Bruegel.