https://arab.news/6v82z
- Brent, WTI surged more than $4 at open before trimming gains
- Iranian missiles strike Israel鈥檚 Tel Aviv and Haifa on Monday
LONDON: Oil prices edged down on Monday, after surging 7 percent on Friday, as renewed military strikes by Israel and Iran over the weekend left oil production and export facilities unaffected.
Brent futures were down 95 cents, or 1.26 percent, to $73.28 a barrel by 3:15 p.m. Saudi time, while US WTI futures were off $1 or 1.37 percent, to $71.98.
Both benchmarks jumped more than $4 a barrel in Asian trading before giving back gains. They settled 7 percent higher on Friday, having surged more than 13 percent during the session to their highest levels since January.
鈥淚t all boils down to how the conflict escalates around energy flows,鈥� said Harry Tchilinguirian, group head of research at Onyx Capital Group. 鈥淪o far, production capacity and export capacity have been spared and there hasn鈥檛 been any effort on the part of Iran to impair flows through the Strait of Hormuz.鈥�
Iranian missiles struck Israel鈥檚 Tel Aviv and the port city of Haifa on Monday, destroying homes and fueling concerns among world leaders at this week鈥檚 G7 meeting that the conflict could widen.
An exchange of strikes between Israel and Iran on Sunday resulted in civilian casualties, with both militaries urging civilians on the opposing side to take precautions against further attacks.
Strait of Hormuz in focus
A key question is whether the conflict will lead to disruptions in the Strait of Hormuz.
About a fifth of the world鈥檚 total oil consumption, or some 18 to 19 million barrels per day of oil, condensate and fuel, passes through the strait.
While markets are watching for potential disruptions to Iranian oil production due to Israel鈥檚 strikes on energy facilities, heightened fears over a Strait of Hormuz blockade could sharply lift prices, said Toshitaka Tazawa, an analyst at Fujitomi Securities.
Iran, a member of the Organization of the Petroleum Exporting Countries, currently produces around 3.3 million bpd and exports more than 2 million bpd of oil and fuel.
The spare capacity of OPEC+ oil producers to pump more to offset any disruption is roughly equivalent to Iran鈥檚 output, according to analysts and OPEC watchers.
鈥淚f Iranian crude exports are disrupted, Chinese refiners, the sole buyers of Iranian barrels, would need to seek alternative grades from other Middle Eastern countries and Russian crudes,鈥� Richard Joswick, head of near-term oil analysis at S&P Global Commodity Insights, said in a note.
鈥淭his could also boost freight rates and tanker insurance premiums, narrow the Brent-Dubai spread, and hurt refinery margins, particularly in Asia,鈥� Joswick added.
China鈥檚 crude oil throughput declined by 1.8 percent in May from a year earlier to the lowest level since August, official data showed on Monday, as maintenance at both state-owned and independent refineries curbed operations.
US President Donald Trump said on Sunday he hoped Israel and Iran could broker a ceasefire, but added that sometimes countries had to fight it out first. Trump said the
US would continue to support Israel but declined to say if he had asked the US ally to pause its strikes on Iran.
German Chancellor Friedrich Merz said he hoped a meeting of the G7 leaders convening in Canada would reach an agreement to help resolve the conflict and keep it from escalating.
Meanwhile, Iran has told mediators Qatar and Oman that it is not open to negotiating a ceasefire while under Israeli attack, an official briefed on the communications told Reuters on Sunday.