Investing.com — Oil prices were mixed in Asian trade on Monday, with focus on Israeli retaliatory measures after Iran's attack on Israel over the weekend pointed to a deteriorating geopolitical situation in the Middle East.
Oil prices had soared to a five-month high in early April as markets feared that escalating conflict in the region could disrupt production in the Middle East.
Although oil prices were still looking at recent highs on Monday, there was a rather subdued reaction to the Iranian attack, suggesting that concerns about worsening geopolitical tensions may already be priced into oil prices. It shows that there is.
Prices expiring in June rose 0.2% to $90.64 per barrel and rose 0.1% to $85.73 per barrel by 20:37 ET. .
Iran attacks Israel, focus on retaliation
Iran launched a series of missile and drone attacks against Israel over the weekend in retaliation for the alleged attack on its embassy in Syria.
But analysts said the attack was mainly carried out by wire and caused little serious damage, limiting the potential for oil prices to rise.
The Iranian government also stated that it was not planning any further attacks.
Israel's response to the attack is expected to determine how the conflict unfolds and whether it spills over into the wider Middle East region.
“The conflict could still be contained to Israel, Iran and their proxies, with possible U.S. involvement,” ANZ analysts wrote in a note. is limited to extreme cases.”
The turmoil in the Middle East will be offset by surplus power.
Analysts at ANZ also said the real impact of the Middle East turmoil on global oil markets would be limited as major oil producers still had plenty of room to boost production.
“OPEC recently reiterated its supply policy, with recent production cuts extended until the end of June. However, approximately 6.5mb/d of free capacity remains. In the event of a disruption, most of this will be brought online immediately. “There is a possibility that it will be changed,'' said an ANZ analyst.
Still, global oil markets are likely to remain tight in the short term as OPEC production declines in the coming months and the conflict between Russia and Ukraine disrupts some of Moscow's oil production. .
However, concerns about a slowdown in demand are also expected to continue to play a role, especially following lackluster economic data from China, the country's largest importer. China is scheduled to release first-quarter statistics on Tuesday.
