Crude prices ease as market factors in impact of Iran-Israel war, US denial to deepen crisis

Iran fired over 300 drones and missiles at Israel on April 13, calling the attack a retaliation to a strike on its consulate in Syria.

Crude oil opened lower on April 15 as the market had last week factored in Tehran's attack on Israel and US denial to participate in retaliatory strikes on Iran fuelled hopes of peace in the Middle East.

The benchmark Brent crude opened at $90.26 a barrel on April 15, lower than $90.45 a barrel at which prices settled on April 12—a day before Iranian hostility on Israel. Oil prices were trading higher in the previous week on account of simmering tension building up between Iran and Israel.

“Brent crude just slid below $90 a barrel in a further sign that traders’ take on the Iran attack over the weekend is focusing on the positives surrounding the potential that tensions will ease going forward,” Vikas Jain, senior research analyst at Reliance Securities, said in a note on April 15.

Also read: Oil on boil as Iran launches attack on Israel; What would be the impact on petrol prices?

Analysts point out that Joe Biden-led US government has warned Israel that it would not participate in further attacks on Israel, an indication that the situation would not worsen in the Middle East.

"However, positive factors are that the US Future is up 0.3 percent and Brent crude declined by 3 percent to below $90 on expectation of reducing geopolitical tension. The media reported that the US president told his Israeli counterpart that the US won't take part in a counter strike against Tehran,” said Jain.

Iran fired over 300 drones and missiles at Israel on April 13, calling the attack a retaliation to a strike on its consulate in Syria, allegedly by Israel, earlier in the month. Since then, Tel Aviv has said it would retaliate and "exact the price from Iran” and has urged for tighter sanctions against Tehran.

Also read: Airfare likely to flare up as tensions intensify between Iran and Israel

Geopolitical tensions in the Middle East, which plays a crucial role in world’s oil supply, could result in oil prices moving towards $100 a barrel. Rising oil prices remain a concern for India as it receives over 85 percent of its requirements from other nations.

So far in 2024, crude oil prices have remained elevated due to tighter supply, shipping risks and attacks by Ukraine on Russian energy infrastructure. In the first quarter of the calendar year, crude prices gained 16 percent and now stand at a six-month high, with currently Brent above $90 and WTI, the US benchmark, breaching $85 a barrel level for the first time since October last year.