Oil prices fell more than $3 per barrel on Monday after the Israeli attacks on Iran in response to Iran's rocket strike on October 1. Both benchmarks, Brent and West Texas Intermediate, reached their lowest levels since October 1 upon opening.
"Fading hopes for a de-escalation path, which caused risk premiums to ease to a negligible dollar per barrel," stated Saul Kavonik, an energy analyst at MST Marquee in Sydney. "In October, the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, left their policy unchanged for oil production, including plans to increase output starting in December."
"The market will be watching closely for confirmation Iran won't counterattack in the coming weeks, which could see the risk premium rise again." Limited strike activity, including avoidance of oil infrastructure, boosted hopes for de-escalation, which caused risk premiums to ease to a negligible dollar per barrel," noted Saul Kavonik, an energy analyst at MST Marquee in Sydney.
"Overall, we consider the market to be partially undervalued, there is a risk that OPEC+ producers may delay the planned increase of production targets beyond December," said analyst Tim Evans from American company Evans Energy. "Regarding Israel's selection of a low-risk response to Iran, we have indications that Israel and the proxies of Iran (i.e., Hamas and Hezbollah) maintain a precarious ceasefire."
Oil prices fell more than $3 per barrel this morning, when Israel attacked Iran in response to Iran's rocket strike on October 1. Hundreds of Israeli strikes concluded three waves of attacks before sunrise on Saturday against rocket production facilities and other targets near Tehran and in western Iran, amid an escalating conflict between regional superpowers. Risk premiums in oil prices, which had accumulated before the response attack from Israel, eased, analysts said. Hopes for sustainable ceasefire between Israel and Iran mean that risk premiums have dissipated, indicated in particular by the company Genesis.
