Oil Prices Plunge as Israel’s Measured Response to Iran Eases Fears of Middle East Conflict
Global oil prices plummeted on Monday, dropping by 6% after Israel’s retaliatory strike against Iran over the weekend targeted military facilities rather than energy infrastructure, as had been feared, The Associated Press reports.
The sharp decline followed a surge in prices earlier this month when Iran launched a series of missile attacks on Israel, escalating tensions in the region and raising concerns of a wider conflict. Iran is the world’s seventh largest oil producer, and a major conflict could have significant implications for global energy markets.
However, the Israeli military’s measured response, focusing on facilities used to manufacture Iranian missiles, appears to have defused the situation for now.
The price of US benchmark crude fell well below $70 per barrel, after reaching over $77 earlier this month. Brent crude, the international benchmark, also experienced a significant drop.
Contributing to the decline is the slowing economic growth in China, a major energy consumer. China’s economy expanded at a rate of 4.6% in the July-September quarter, down from 4.7% in the previous quarter, falling short of the government’s target.
The long-term expectation is for oil prices to continue their downward trend, driven by a global surplus in oil production. The International Energy Agency (IEA) reported that demand for oil in the first half of this year rose by the smallest amount since 2020, while supplies continue to increase.
This downward trend is reflected in gasoline prices, which are also in retreat, falling below $3 per gallon at more than half of US gas stations. The national average price of $3.13 per gallon is down significantly from last year, with prices even lower in many southern states.
