Analysts warn that oil prices could reach triple digits if the conflict between Israel and Iran escalates.
Israel has vowed to “exact a price” from Iran in retaliation for the large-scale aerial assault this weekend. Iran launched more than 300 drones and missiles against military targets inside Israel on Saturday. Analysts said that the Israeli government is now seriously considering the possibility of direct strikes against Iran, but Israel will need to find a delicate balance in order not to provoke an open conflict with Iran, which has huge oil reserves and is the third largest producer in OPEC.
Any disruption to Iran's ability to supply oil to world markets could lead to higher prices. An important factor for the oil market will also be the development of the situation around the Strait of Hormuz, a key chokepoint which sits between Iran and Oman and through which one-fifth of global oil production flows daily.
"An attack on oil production or export facilities in Iran could raise the price of Brent oil to $100. Meanwhile, in case of closure of the Strait of Hormuz, prices may reach the range of 120- 130 dollars," Lipow Oil Associates said.
Oil prices have risen significantly in recent months due to trade disruptions and delays caused by Houthi attacks on ships in the Red Sea.
Since the beginning of today's session, Brent oil prices have fallen by 0.55% to $89.95, while WTI oil has fallen by 0.6% to $85.17.