Oil prices dropped sharply on Monday as traders took a deep breath and assumed Iran wouldn’t disrupt global oil supplies by attacking key shipping lanes in the Middle East.
The US benchmark West Texas Intermediate fell 7.2% to $68.51 per barrel, while Brent crude dropped 4% to $68.06 per barrel. The price drop followed President Donald Trump’s announcement of a complete ceasefire between Israel and Iran, which reduced traders’ fears of a oil supply disruption.
Iran’s missile attack on an Al Udeid Air Base in Qatar, where the US military is stationed, was seen as a limited response that signaled no intention to shut down oil shipments. The country’s own crude production is also reliant on key waterways like the Strait of Hormuz, making it unlikely to disrupt its own supply.
Analysts point out that while Iran has some ways to raise prices, including jamming navigational devices or dropping mines, these actions could have unintended consequences and would be seen as suicidal. The US benchmark oil price is now below where it was before fighting between Iran and Israel began over a week ago.
The drop in oil prices is good news for Trump, who wants the Federal Reserve to cut interest rates. It’s also a boon for motorists this summer if the trend holds, with drivers already paying higher prices at the pump before the US attack.
Source: https://apnews.com/article/oil-prices-crude-hormuz-iran-bombing-israel-gas-trump-tehran-c628662e5e3522e23c762a2c591d1580