Crude oil futures traded lower on Monday morning after Israel’s retaliatory attack on Iran over the weekend, which avoided oil and nuclear facilities. This eased the market concerns about possible crude oil supply disruptions in the West Asia region.
At 9.56 am on Monday, January Brent oil futures were at $72.19, down by 4.55 per cent, and December crude oil futures on WTI (West Texas Intermediate) were at $68.39, down by 4.72 per cent.
November crude oil futures were trading at ₹5773 on Multi Commodity Exchange (MCX) during the initial hour of trading on Monday against the previous close of ₹6040, down by 4.42 per cent, and December futures were trading at ₹5766 against the previous close of ₹6023, down by 4.27 per cent.
On Saturday, Israel’s air defence system attacked the military targets in Iran. This was in response to missile attacks by Iran in early October. Iran’s attack on Israel had created fears in the market about the possible escalation in tensions in West Aisa. Israel had vowed to retaliate for Iran’s attack. This had created fears about possible attacks on nuclear and oil facilities in Iran.
In their Commodities Daily feed, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said oil prices opened lower on Monday morning with ICE Brent trading more than 4 per cent lower.
Stating that this weakness comes despite Israel finally responding over the weekend to Iran’s recent missile attack, they said Israel’s response appears to have been measured with only Iranian air defence and missile production facilities targeted.
“The concern for the market had been if Israel targeted Iran’s energy or nuclear infrastructure. The more targeted response from Israel leaves the door open for de-escalation and clearly the price action in oil this morning suggests the market is of the same view. While it is still unclear if or how Iran may retaliate, the government has downplayed the damage caused by Israel’s response,” they said.
Any moves of de-escalation of tensions would allow fundamentals once again to dictate price direction, they said, adding: “and with a surplus market over 2025, this would mean that oil prices are likely to remain under pressure.”
November natural gas futures were trading at ₹254.50 on MCX during the initial hour of trading on Monday against the previous close of ₹258.20, down by 1.43 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), November guarseed contracts were trading at ₹5242 in the initial hour of trading on Monday against the previous close of ₹5280, down by 0.72 per cent.
December cottonseed oilcake futures were trading at ₹2922 on NCDEX in the initial hour of trading on Monday against the previous close of ₹2948, down by 0.88 per cent.