Crude oil prices fell 4% at the beginning of the week and oil prices opened on a large price gap down, after the Israeli strikes on Iran that did not target the country's oil and nuclear infrastructure, which eased fears of energy supply disruptions, and also fears of a wider escalation in the Middle East amid the ongoing conflicts in Gaza and Lebanon and tensions between Israel and Iran.
Iran also downplayed the scale and effectiveness of the attack and did not immediately say it would retaliate,This, they say is likely to lead to a significant reduction in the geopolitical risk premium that has been priced in the oil markets in the next few days.
On the demand side, signs of weakening economic activity continued in China, the world's largest oil consumer, as weekend data pointed to a decline in industrial profits despite the recent government stimulus.
