Oil prices plunged on Monday as the market reacted to Iran's latest missile attacks by betting that the country would not harm energy infrastructure.
Brent prices fell nearly 6%, to $71.11 per barrel, just hours after reaching a peak of $81.40. West Texas Intermediate (WTI) also followed the downward trend, falling below $70 and erasing all gains from the past 10 days.
This sudden price increase began when Israel launched a surprise attack on Iran's nuclear facilities and air defense eleven days ago, leading to concerns about direct retaliation from Tehran.
Iran fired missiles at the Al Udeid airbase in Qatar, where 10,000 U.S. soldiers are stationed. The Doha government stated that it has thwarted these attacks. Another round of missiles targeted U.S. military positions in Iraq.
However, the most important factor for traders is what Iran is not doing: not touching oil pipelines, tankers, or refineries. This is what caused oil prices to plummet. According to reports from the Financial Times, the attacks are seen as a retaliatory move that does not want to escalate tensions affecting energy assets.
Iran recalls its 2020 strategy
Michael Alfaro, an investment director at Gallo Partners, noted that this is a 'clearly signaled move' and sends the message that Iran is 'less likely to weaponize crude oil'. He stated that the market remains well supplied, and while tensions have not eased, that does not mean supply will tighten.
Rory Johnston, an oil market expert at Commodity Context, commented that the current situation reminds him of January 2020 when Iran launched missiles at a U.S. base in Iraq after Washington killed its top military general. At that time, just like now, Iran indirectly signaled to the U.S. to allow time for troop withdrawal. Rory described the oil sell-off on Monday as a direct response sending a 'de-escalation' signal.
Despite strong calls from hardline elements in Iran to blockade the Strait of Hormuz, Tehran has not yet acted. This waterway accounts for about 25% of the total oil transported by sea globally. Currently, oil tankers continue to move normally.
Trump calls for operators to lower oil prices
Although oil prices have fallen, tensions in the Gulf still worry Washington. President Donald Trump posted on social media Truth Social, ordering U.S. oil companies to increase production to the market.
"EVERYONE, KEEP OIL PRICES LOW. I'M WATCHING! YOU'RE HELPING THE ENEMY. DON'T DO THAT!" he wrote. Then added: "To the Department of Energy: DRILL, DRILL, DRILL!!! I mean it!"
However, he can hardly do much. Most U.S. oil production comes from private land, with limited federal control. Bob McNally, head of Rapidan Energy and former energy advisor to President George W. Bush, stated that presidents have 'limited options' to push prices down. According to him, an effective solution is to 'prevent Iran from activating the 'oil button': attacking or disrupting Gulf oil production.'
The Trump administration is still considering next steps. President Joe Biden previously used the Strategic Petroleum Reserve in 2022 to lower oil prices after Russia invaded Ukraine. Although effective, this measure was not immediate.
Currently, oil supply from the Middle East remains unaffected. But the market is closely monitoring developments. In fact, Iran is only targeting military sites, not affecting oil transport routes, indicating that Tehran wants to demonstrate strength, not create chaotic oil prices. For now, that is enough to ensure stable oil flow and prices.
Source: https://tintucbitcoin.com/gia-dau-giam-mo-cua-dau-tu-tien-dien-tu/
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