Oil prices dipped over 6 percent as the market reacted to Israel’s limited attacks on Iran on Monday.

Brent futures settled at $71.42 a barrel, down $4.63 or 6.09 percent while the US West Texas Intermediate (WTI) crude futures finished at $67.38 a barrel, $4.40 or 6.13 percent.

Over the weekend, jets from Israel completed three waves of strikes before dawn against missile factories and other sites near Tehran and in western Iran, heightening tensions in the region further.

The attacks were more tailored toward military targets – including Iran’s air defences, as well as missile and drone production, and launch facilities – easing fears that Israel might attack Iran’s nuclear facilities or oil infrastructure.

Also, Iran’s Supreme Leader Ayatollah Ali Khamenei helped cool tensions on Sunday when he signalled there would not be any direct response to Israel’s latest attacks.

The markets have been waiting for the majority of the month for a retaliation by Israel following the direct Iranian offensive against the Jewish state earlier this month. Broader Middle East tensions have continued to rise after the attack on Israel by Iran-backed Hamas on October 7 of last year.

Iran accounts for up to 4 per cent of global oil supplies, according to the US Energy Information Administration (EIA).

This development has led analysts like Citi to lower Brent’s price target for the next three months to $70 a barrel from $74, factoring in a lower risk premium in the near term.

A de-escalation that will cause markets to refocus on surplus supply and lacklustre demand, the analysts added.

The Organisation of the Petroleum Exporting Countries and its allies in OPEC+ kept oil output policy unchanged last month, including a plan to start raising output in December.

The group will meet on December 1 ahead of a full meeting of OPEC+

Even before the latest developments, Goldman Sachs had warned that there was limited upside for oil prices in 2025, citing spare capacity and weak demand.

Market attention will also turn to Hamas‑Israel and Israel‑Hezbollah cease-fire talks that resumed over the weekend.

Global oil prices retraced on Monday after reports showed Israel strikes avoid Iran’s oil facilities in its much anticipated retaliatory attack.

Brent crude oil, against which Nigerian oil is priced, declined below $72 per barrel while the US West Texas Intermediate crude oil was trading near $68.

Israel Defense Forces (IDF) said it attacked military targets across Iran on Saturday and struck “strategic systems.”

“We drew upon only some of our abilities,” Chief of Staff Lt. Gen. Herzi Halevi said in the clip, part of a meeting in which top brass assessed the results of the assault, a retaliation for Iran’s massive Oct. 1 ballistic missile barrage on Israel. “We have the ability to do much more.”

“We hit strategic systems in Iran… and we will see how things develop now. We are ready for all scenarios on all fronts,” he added.

Experts are now predicting a further decline in the price of crude oil and expected uncertainty surrounding the United States election to impact commodity prices in the remaining part of the year.

“We may see further short-term downward pressure as the geopolitical premium is priced out,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. “However, we see strong support around $70 and, with last night’s price drop, most of the geopolitical premium is likely already priced out.”

The ongoing conflict in the Middle East and the election in the United States bolstered crude oil prices on Friday.

Brent crude settled up $1.67, or 2.25 percent to trade at $76.05 a barrel while the US West Texas Intermediate (WTI) crude settled up $1.59, or 2.27 percent to $71.78.

In the week ended Friday, Brent crude oil gained 4 percent while WTI appreciated by 3.7 percent higher.

Market analysts note that the tensions on the geopolitical front especially in the Middle East with Israel against Hamas and Hezbollah, backed by Iran, have supported largely decided prices in the last month.

According to the US Secretary of State, Mr Antony Blinken said there was a sense of urgency in getting to a diplomatic resolution to end the conflict in Lebanon between Israel and Hezbollah, while calling for the protection of civilians.

Officials from the US and Israel are set to restart talks for a ceasefire and the release of hostages in Gaza in the coming days.

Investors continue to await Israel’s response to an Iranian missile attack on October 1 especially after it said it would not strike the country’s nuclear or oil targets and instead opt for military targets. If it had attacked the oil targets, it would have triggered some increase in oil prices.

Now, investors globally are piling into the Dollar and betting on rising volatility ahead of these next crucial two weeks leading up to the November 5 election in the US between Donald Trump and Kamala Harris.

Also, the market is watching an election in Japan and looking forward to plans by three major central banks on interest rates and the UK government presenting its new budget.

Traders are also seeking more clarity on China’s stimulus policies, though analysts do not expect such measures to provide a major boost to oil demand.

Goldman Sachs on Thursday left its oil price forecasts unchanged at between $70 and $85 a barrel for Brent in 2025, expecting the impact from any Chinese stimulus to be modest relative to bigger drivers such as Middle East oil supply.

Bank of America is forecasting Brent crude to average $75 a barrel in 2025 without any rolling back of production cuts by the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ into next year, it said in a note on Friday.