Oil prices tumbled $5 a barrel, or over 6%, on Monday after Iran attacked a US military base in Qatar in retaliation for US attacks on its nuclear facilities at the weekend, and took no action to disrupt oil and gas tanker traffic through the Strait of Hormuz.
Brent crude futures LCOc1 were down $4.90, or 6.3%, at $72.19 a barrel by 2:13pm ET (1813 GMT). US West Texas Intermediate crude (WTI) CLc1 eased $4.60, or 6.2%, to $69.23.
Global benchmark Brent had kicked off the week with nearly 6% jump to a five-month high as markets opened after US President Donald Trump said on Saturday he had “obliterated” Iran’s main nuclear sites in airstrikes, joining an Israeli assault in an escalation of conflict in the Middle East as Tehran vowed to defend itself.
Iran, which is OPEC’s third-largest crude producer, said on Monday that the US attack on its nuclear sites expanded the range of legitimate targets for its armed forces.
The oil market, however, started to sell off after Iran retaliated, saying it carried out a missile attack on the Al Udeid US airbase in Qatar, the largest US military installation in the Middle East.
“Oil flows for now aren’t the primary target and are likely not to be impacted, I think it’s going to be military retaliation on US, bases and/or trying to hit more of the Israeli civilian targets,” said John Kilduff, a partner at Again Capital.
There was no interruption to QatarEnergy shipments or production after the attack, a source with direct knowledge of the matter said, and no other Iranian attack detected at any US military base other than in Qatar, a US military official told Reuters.
“It is somewhat the lesser of the two evils. It seems unlikely that they’re going to try and close the Strait of Hormuz,” said Kpler analyst Matt Smith.
About a fifth of global oil supply flows through the Strait. However, a complete shutdown is unlikely, analysts have said.