Oil Prices Dip Despite Escalating Tensions

Oil prices declined early on Friday, despite the geopolitical tensions escalating following Israel's retaliatory attack on Iran, which resulted in minimal damage.

The decrease in oil prices occurred after Israel executed drone strikes near Isfahan, a major Iranian city. These attacks were in response to Iran's attempts over the weekend to target Israel with drones and missiles, which largely proved ineffective with most being intercepted by aircraft and air-defense systems. According to The Guardian, the Iranian government is minimizing the significance of the attack, and an Iranian official indicated that there are no immediate plans for retaliation.

Despite an initial spike in Brent crude prices, which soared back above US$90.00 in overnight trading following the attack, prices soon receded. Traders reduced the oil risk premium quickly, shifting focus away from the immediate impacts of the ongoing conflict between Israel and Gaza and continuous attacks by Yemen's Houthi militants on Red Sea shipping.