Oil Prices Drop Nearly 5% After Israeli Airstrikes Spare Iran's Oil Facilities

Dow Jones10-28 07:02

Crude oil futures fell Sunday, after widely-anticipated Israeli airstrikes against Iran did not hit crucial oil facilities.

As of 6:30 p.m. Eastern, West Texas Intermediate crude (CL00) dropped 4.7%, to $68.43 a barrel, while Brent crude (BRN00), the global benchmark, was down 4.5% to $72.27.

Oil futures rose last week on worries that the impending Israeli attack, in retaliation for an Iranian missile barrage against Israel on Oct. 1, would target Iran's oil facilities and potentially spark a wider war in the Middle East. Saturday's strikes by Israeli jets and missiles instead targeted Iranian air-defense sites and military infrastructure. The smaller scale of the attack led some experts to speculate that tensions would not significantly escalate.

"The attack by Israel avoided hitting energy infrastructure and was limited in scope. The limited attack is likely to calm the fears of a direct conflict with Iran and oil prices are likely to decline when futures trading commences on Sunday," Jay Hatfield, CEO at Infrastructure Capital Advisors, said in a note. "We expect oil prices to return to our estimated $75-$95 fair value range as we head into the winter heating and travel season."

But Phil Flynn, senior market analyst at the Price Futures Group, warned that worries about Persian Gulf oil aren't over yet. "The bottom line for oil is that an immediate threat to a disruption of supply has been put aside for now," he said in a note Sunday. "In the bigger picture, if you think this one attack is going to end the hostilities, I don't think so... Even though Iran says they won't respond, I would assume that Iran is going to try to get their proxies to regroup and respond in some way."

Meanwhile, U.S. stock-market futures were mixed Sunday. Dow Jones Industrial Average futures (YM00) fell 0.6%, or 260 points, while S&P 500 futures (ES00) were little changed and Nasdaq-100 futures (NQ00) rose 0.6%, or 103 points, indicating that the tech-heavy index is poised to extend its winning streak.

The Nasdaq closed Friday with its seventh straight week of gains, just 0.7% below its record high. The Dow and S&P 500 each finished lower for the week, snapping six-week winning streaks

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