October 28, 2024 – Oil prices tumbled by 6% after Israel launched a limited retaliatory attack on Iran, easing fears of a broader military escalation in the region. Market analysts say the restrained nature of the operation reduced concerns about potential disruptions to oil supplies from the Middle East.
The drop in prices reflects relief in energy markets that a full-scale conflict between Israel and Iran has so far been avoided. Traders had initially feared that tensions could spill over into vital oil transit routes, such as the Strait of Hormuz, through which a significant portion of the world’s oil passes. However, the limited scope of Israel’s action has calmed markets for now.
The recent strike comes amid heightened tensions following attacks by Iran-backed militant groups, which had drawn threats of retaliation from Israel. The global oil market, already jittery due to the Israel-Hamas conflict and concerns about regional instability, reacted swiftly to any signs that escalation might be avoided.
Following the news, Brent crude dropped to $83.50 per barrel, while West Texas Intermediate (WTI) settled around $78 per barrel—both marking a 6% decline from previous levels. Analysts suggest that if tensions continue to de-escalate, prices could stabilize further.
While the immediate threat has diminished, the situation remains fluid, and any renewed flare-up could trigger fresh volatility in oil markets. Traders are also watching for further geopolitical developments that could influence supply chains in the region.
The recent sell-off highlights how sensitive energy markets are to geopolitical developments, particularly in the Middle East, which remains a key region for global oil production and transit.