Oil Prices Plunge After Iran Retaliates Against US

HOUSTON: Oil prices experienced a sharp decline on Monday, plummeting by $5 per barrel, or over 6%, following Iran’s response to US strikes on its nuclear facilities. The Iranian action, a missile attack on a US military base in Qatar, did not disrupt oil and gas tanker traffic through the Strait of Hormuz.

Brent crude futures decreased by $4.90, or 6.3%, to $72.19 a barrel by 2:13 p.m. ET (1813 GMT). US West Texas Intermediate crude (WTI) fell by $4.60, or 6.2%, settling at $69.23.

Earlier in the week, global benchmark Brent had surged nearly 6% to reach a five-month high after reports indicated that the US President had ordered airstrikes that “obliterated” Iran’s key nuclear sites, escalating the conflict in the Middle East after an Israeli assault. Tehran had vowed to retaliate.

Iran, a major crude producer within OPEC, stated on Monday that the US attack on its nuclear sites broadened the scope of legitimate targets for its military forces.

However, the oil market initiated a sell-off after Iran’s retaliation, which involved a missile strike on the Al Udeid US airbase in Qatar, a major US military installation in the Middle East.

Analyst Perspectives

“For the moment, oil flows are not the primary target and are unlikely to be affected. I believe the focus will be on military retaliation against US bases and potentially targeting more Israeli civilian locations,” noted John Kilduff, a partner at Again Capital.

A source with direct knowledge confirmed that there were no disruptions to QatarEnergy shipments or production following the attack. Furthermore, a US military official indicated that no other Iranian attacks were detected at any US military base apart from the one in Qatar.

“This situation represents the lesser of two evils. It appears improbable that they will attempt to close the Strait of Hormuz,” commented Kpler analyst Matt Smith.

Strait of Hormuz Impact

Approximately one-fifth of the world’s oil supply passes through the Strait. While a complete shutdown remains unlikely, analysts suggest the possibility.

Ship tracking data revealed that at least two supertankers executed U-turns near the Strait of Hormuz in the wake of the US military strikes on Iran. This follows over a week of regional unrest that has prompted vessels to increase speed, pause, or reroute their journeys.