Oil prices are steady as traders await developments in the Iran-Israel conflict

Crude oil prices remained steady early Monday morning as traders awaited the next development in the ongoing conflict between Israel and Iran, after a major rally in prices last week.

After posting their strongest gains in about a year, Brent and West Texas Intermediate crude started this week flat, with Brent trading around $78 a barrel and WTI trading below $75 a barrel.

Much of the gains in oil prices last week came after President Biden said the US had discussed with the government in Tel Aviv about possibly targeting Iran’s oil industry. Then Biden said, also Friday, that he didn’t know how the Israelis would respond to the Iranian attack, but “I would think about alternatives other than hitting the oil fields,” Bloomberg reported.

Meanwhile, “Profit-taking may have been the cause of the pullback after last week’s price rally,” market analyst Tina Teng told Reuters. “However, the oil market is likely to continue to face increasing pressure due to fears of Israel’s retaliation response. Geopolitical tensions now play a key role in shaping the market trend.

Indeed, geopolitics has become the main driver of oil prices, prompting Goldman Sachs to warn last week that a war between Israel and Iran could send oil up $20 a barrel.

“If you were to see a sustained decline of 1 million barrels per day in Iranian production, then you would see a maximum increase in oil prices next year of around $20 a barrel,” said Daan Struyven, co-head of the research global of goods to investment. the bank said on CNBC on Friday.

However, Struyven noted that this projection is based on the assumption that OPEC+ would not respond to a potential supply disruption from Iran by increasing production.

In related news, Saudi Arabia raised its oil prices to Asian buyers by more than analysts expected.

By Irina Slav for Oilprice.com

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