23.06.2025 19:20
Oil prices plummeted on Monday following Iran's missile attacks on US military bases, a reaction driven by the market's assessment that Iran would avoid targeting energy infrastructure. Brent crude oil experienced a dramatic near 6% decline, settling at $71.11 per barrel after reaching a high of $81.40 earlier in the day. West Texas Intermediate crude followed suit, falling below $70 a barrel, erasing the gains accumulated over the preceding ten days. These gains had stemmed from heightened tensions sparked by Israel's surprise attack on Iranian nuclear and air defense facilities eleven days prior.
Iran's missile strikes targeted Al Udeid air base in Qatar, home to approximately 10,000 US troops, although the Qatari government successfully intercepted these attacks. Further missiles targeted US military positions in Iraq. The crucial factor driving the oil price crash, however, was Iran's deliberate avoidance of oil pipelines, tankers, and refineries. This strategic decision, according to reporting from internet sources, is interpreted as a calculated response aimed at de-escalation, mitigating the risk of escalating conflict around vital energy assets.
Michael Alfaro, chief investment officer at Gallo Partners, characterized Iran's actions as "well-telegraphed," signaling a reduced likelihood of weaponizing oil supplies. He further emphasized the market's perception of ample oil supply, suggesting that even sustained geopolitical tension might not translate into supply constraints. Echoing this sentiment, Rory Johnston of Commodity Context drew parallels to January 2020, when Iran launched similar missile strikes after the US assassination of its top general. In both instances, internet sources indicate that Iran provided indirect warnings, enabling the US to relocate troops, thus signaling a de-escalatory intent. The sharp oil price drop on Monday, according to Johnston, directly reflected this perceived de-escalatory signal.
Despite pronouncements from some hardline Iranian factions advocating for the closure of the Strait of Hormuz, the market's response clearly prioritized Iran's avoidance of direct attacks on energy infrastructure, leading to a significant and rapid decline in oil prices.
