U.S. oil prices retreated from weekly highs as markets assessed the potential for a reprieve in Middle East turmoil following a week of escalating tensions.
The U.S. crude oil price benchmark, West Texas Intermediate, fell 8% to less than $68 a barrel, the lowest level since last week. The global Brent crude price benchmark likewise fell about 8%. Major stock indexes ended the day in positive territory.
Just after 1 p.m. ET Monday, Iran said it had launched missiles toward a U.S. base in Qatar. Reports suggested the missiles had been intercepted.
Markets viewed the strikes “as more of a symbolic retaliatory attack rather than one to result in significant damage to USA assets in the region,” Andy Lipow, president of Lipow Oil Associates energy consultancy and an oil markets expert, said in an email to NBC News.
As a result, he said, oil markets have begun selling off, since it appears shutting down marine traffic through the Strait of Hormuz, a chokepoint in the Persian Gulf through which about one-fifth of the world’s oil supply travels, will not figure into Iran’s retaliatory measures.
It also sets up the possibility for a diplomatic resolution to the conflict, which first heated up last week following Israeli strikes on Iranian targets, Lipow said.
Kevin Book, head of research at ClearView Energy Partners consultancy, said in an email that markets had primed themselves for a worst-case scenario in the run-up to Monday afternoon.
“This may be that market selling the news, especially if Iran’s retaliation had limited impacts,” he said.
President Donald Trump has signaled he is keenly aware of the market’s response. Earlier Monday, he posted on his Truth Social platform in all caps: “Everyone, keep oil prices down. I’m watching! You’re playing right into the hands of the enemy. Don’t do it!”
It is not clear whom he was addressing, as prices are controlled by market forces weighing supply and demand.
Over the weekend, Iran’s state-owned media reported that Iran’s parliament backed closing the Strait of Hormuz — but the final decision lies with Iran’s national security council, according to the report.
While the strait represents a vital node for global oil supplies, it now accounts for only about 7% of total U.S. crude oil imports. Overall, U.S. crude oil imports from countries in the Persian Gulf fell to their lowest level in nearly 40 years last year thanks to booming domestic production and imports from Canada, according to the U.S. Energy Information Administration.
The past 12 hours have seen volatile trading in oil markets as traders assessed the potential fallout from the weekend U.S. strikes on Iranian nuclear facilities.
Wall Street analysts said that by ordering the strikes, Trump has injected further uncertainty into markets already on edge from his on-again, off-again tariff announcements.
“There is in our view a wide range of outcomes for oil prices in the next few weeks,” analysts with UBS financial group wrote in a note to clients. “The nature and extent of Iranian retaliation remains the key parameter.”
Analysts with ING financial group earlier outlined four possible avenues for Iran: full escalation that also draws in other nations such as China or Russia; disruption of the Strait of Hormuz; active or passive support for terrorist attacks in the U.S. and Europe; or taking no action at all.
“We will abstain from speculating about the next steps and instead conclude that the most likely economic consequences from the US strikes will be on general uncertainty and on the price of oil,” the ING analysts wrote in a note to clients.
