World oil prices sink on de-escalation hopes

NEW YORK, United States — World oil prices sank Monday as traders bet on de-escalation in the Middle East despite a strike on Israel by key crude producer Iran.

Brent shed 0.4% while the WTI prices lost 0.3%, as global stock markets diverged.

Iran unleashed more than 300 ballistic and cruise missiles and attack drones late Saturday. Most were repelled by Israel’s air defenses.

Tehran said the aerial strike was a legitimate response to a deadly attack on an Iranian embassy building in Damascus attributed to Israel. But it also said “the matter can be deemed concluded.”

“The market sees de-escalation as the most likely path despite the Iranian strike,” noted analysts at DNB Markets.

“The attack was well announced, with Israel and its allies fully prepared, it caused minor damage and no casualties, and with Iran quickly out saying that ‘the matter can be deemed concluded’. A clear invitation to de-escalate.”

Experts said the limited scope of the attack showed Iran was seeking to make a show of strength, but without sparking a conflict.

US President Joe Biden was reported to have cautioned Israeli Prime Minister Benjamin Netanyahu to “take the win” and forgo a counterattack.

Nevertheless, Asian equities mostly fell on fears of a broader conflict in the volatile Middle East, although Shanghai stocks jumped higher on news of fresh regulatory measures that could help its long-term performance.

Analysts at Deutsche Bank said “there is the risk that a geopolitical shock hurts growth, bringing forward the timing of rate cuts.”