Oil prices fell on Monday after last week recorded its largest weekly rise in more than a year, as Brent crude prices rose by more than 8% last week, while the West Texas Intermediate contract rose by more than 9% on a weekly basis, amid expectations that Israel may strike Iranian oil infrastructure in response to Iran's attack on the occupied entity on the first of October.
With oil prices falling on Monday, technical profit-taking seems to be the most logical explanation.
We still expect that the oil markets will witness a further rise amid fears of an Israeli response to Iran, especially with the anniversary of the seventh of October, the beginning of the Al-Aqsa flood and the first blow to Israel by the resistance.
On the other hand, some forecasts suggest that the blow to Iran's oil infrastructure will not have a strong impact on supplies, as OPEC and its allies, including Russia and Kazakhstan, have millions of barrels of spare capacity since they cut production in recent years to support prices amid weak global demand.
That could offset Iranian supplies if Israel strikes its facilities, but it would face difficulties if Iran retaliates by striking its neighbors facilities in the Gulf.
In addition, Libya resumed oil production at all oil fields and export terminals last week, which strengthened confidence in adequate supply.
It is worth noting that at the last OPEC meeting on October 2, the organization has kept the oil production policy unchanged including a plan to start increasing production from December.
