Oil prices fell in early Asian trade after Iran’s reprisal attack on Israel over the weekend.
Brent crude – a key benchmark for oil prices internationally – was lower but still trading close to $90 a barrel on Monday morning.
Prices had already risen in expectation of action by Iran, with Brent crude nearing a six-month high last week.
Israeli Defence Minister Yoav Gallant has said the confrontation with Iran is “not over yet”.
“Clearly, the oil market does not see the need to factor in any additional supply threat at this point,” energy analyst Vandana Hari said.
Brent crude could well fall below $90, but a significant drop is unlikely as traders continue to focus on risks related to conflicts in Gaza and Ukraine, he added.
Analysts also said Israel’s response to the attack will be critical to global markets in the coming days and weeks.
“I think we’re going to see some natural fluctuations. If there’s an Israeli counterattack, I think the energy market will go up sharply,” said Peter McGuire of trading platform XM.
Asia-Pacific stock markets also fell on Monday as investors weighed the impact of the attack. Hong Kong’s Hang Seng Index, Japan’s Nikkei Stock Average, and South Korea’s Kospi Index all fell, while China’s Shanghai Stock Exchange Composite Index rose more than 1%.
Gold prices rose slightly and settled near record highs. The price was approximately $2,400 per ounce.
Gold is seen as a safe investment in times of uncertainty and soared ahead of this weekend.
Iran fired drones and missiles at Israel over the weekend after announcing retaliation for an April 1 attack on its consulate in the Syrian capital Damascus.
Israel has not said it carried out the attack on the consulate, but it is widely believed to be behind it.
Late last week, Brent crude oil prices reached $92.18 per barrel, the highest level since October, but have since fallen back to close at $90.45.
According to the US Energy Information Administration, Iran is the world’s seventh largest oil producer and the third largest member of the OPEC oil producing cartel.
Analysts say a key question for future oil prices is whether shipping through the Strait of Hormuz will be affected.
The strait between Oman and Iran is an important shipping route through which approximately 20% of the world’s total oil supply passes.
OPEC members Saudi Arabia, Iran, the United Arab Emirates, Kuwait, and Iraq send most of their oil exports through the strait.
On Saturday, Iran seized a commercial ship with links to Israel as it passed through the Strait of Hormuz.