Oil prices slipped from recent highs as traders awaited Israel’s reaction to an unprecedented attack from Iran. Crude had surged to a five-month peak before retreating as most of the 300 drones and missiles launched by Iran were intercepted. West Texas Intermediate (NYSE:WTI) traded below $85 a barrel on Monday, though it trimmed losses after Axios reported Israeli Defense Minister Yoav Gallant’s statement that Israel would retaliate against Iran.
JPMorgan Chase & Co. analysts, including Natasha Kaneva, noted that the oil outlook hinges on Israel’s response to the attack. Despite the tense rhetoric from both sides, the oil market may continue to place a significant premium on prices in the short term.
Oil has shown strength among commodities this year, supported by OPEC+’s efforts to manage supply and reduce inventories. Rising tensions in the Middle East have further boosted prices, with analysts suggesting the potential for oil to reach $100 a barrel. Societe Generale SA revised its forecast upward, indicating that direct military action between the US and Iran could push Brent crude to $140.
The focus on shipping risks intensified after Iran seized the MSC Aries near the strategic Strait of Hormuz before the attacks on Israel. The vessel’s beneficial owner is linked to the Israel-based Zodiac Group, raising concerns about vessel safety in the region amid previous logistical disruptions.
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