Oil futures experienced a slight decline on Thursday, reflecting the markets’ subdued response to the ongoing tensions in the Middle East.
Despite the potential for escalations, particularly from Israel, the week passed without any new significant developments that might worsen the situation.
On the New York Mercantile Exchange, June delivery West Texas Intermediate (WTI) decreased slightly by 0.06% to close at $82.10/barrel.
In a similar trend, Brent crude for June delivery fell by 0.21%, or $0.18, settling at $87.11 per barrel on the Intercontinental Exchange.
Iran’s drone and missile strikes on Israel triggered geopolitical tensions, influencing restrained oil price fluctuations in the aftermath.
Despite these provocations, Israel has yet to respond, although retaliation remains a distinct possibility.
Prime Minister Benjamin Netanyahu has publicly committed to taking all necessary measures to defend Israel, as reported by Oxford Economics.
The financial markets have remained relatively calm in the face of these events, suggesting a low expectation of a broader conflict.
Oil surged to $88 but declined due to factors like U.S. inflation, reduced demand, and Iran’s robust oil output.
The future actions Israel might undertake remain unclear, especially considering the delayed response so far.
Should Israel decide on substantial military retaliation, it could intensify the regional tensions, notes Oxford Economics.
Furthermore, Julius Baer, in its baseline scenario, does not foresee a major escalation in Middle East conflicts.
Anticipated factors such as reduced demand and Saudi Arabia‘s production cuts relaxation signal a downward oil price trend ahead.
This outlook offers a glimpse of potential stabilization in oil markets despite the current geopolitical frictions.