Analysts say oil prices are expected to fall when markets reopen for trading on Monday (October 28).
The forecast is based on concerns about supply risks that have narrowed, after Israel's retaliatory attack on Iran on October 26 bypassed Tehran's oil, gas, and nuclear infrastructure and did not disrupt energy supplies.
Last week, North Sea Brent crude and US West Texas Intermediate (WTI) crude oil prices rose 4% amid trading volatility, as markets worried about supply risks related to the extent of Israel's response to Iran's missile attack on October 1st and political instability surrounding the US election in November 2024.
Despite escalating tensions in the Middle East – a major global oil supply source – "the market can breathe a sigh of relief" thanks to the safety of oil wells, said Harry Tchilinguirian, head of research at Onyx. However, he added: "What remains unclear is whether this will be Israel's final retaliatory response to Iran."
"Israel did not attack oil and gas infrastructure, and reports indicate that Iran would not retaliate. That removes a factor of instability for the oil market," said Tony Sycamore, a market analyst at IG Bank in Sydney, Australia.
Although most analysts agree that oil prices will fall when the market reopens on the morning of October 28th, the possibility of rumors aimed at driving prices up cannot be ruled out. WTI oil prices could hover around $70 per barrel, according to Sycamore's analysis. Meanwhile, Tchilinguirian believes that geopolitical risk premiums have been incorporated into oil prices for months and Brent oil prices will return to $74-$75 per barrel.
Giovanni Staunovo, a commodity analyst at UBS, also expects oil prices to fall this week as Israel's response to the Iranian attack appears to have been contained. However, he noted that the downward trend may only be temporary and that many geopolitical risks remain to impact oil prices.
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