Oil prices expected to rise after Iran’s attack on Israel, but further gains may depend on response

Oil prices are expected to rise on Monday after Iran’s attack on Israel over the weekend, analysts said on Sunday, but further gains may depend on how Israel and the West choose to retaliate.

Iran launched explosive drones and missiles at Israel late on Saturday in retaliation for a suspected Israeli attack on its consulate in Syria on April 1, a first direct attack on Israeli territory that has stoked fears of a wider regional conflict.

Concern of a response from Iran to the strike on its embassy compound in Damascus supported oil last week and helped send global benchmark Brent crude on Friday to $92.18 a barrel, the highest since October.

It settled that day up 71 cents at $90.45, while U.S. West Texas Intermediate CLc1 crude futures rose 64 cents to $85.66. Trading is closed on Sunday.

“It is only reasonable to expect stronger prices when trading resumes,” said Tamas Varga of oil broker PVM. “Having said that, there has been no impact on production so far and Iran has said that ‘the matter can be deemed concluded’.

“However fierce and painful the initial market reaction will be, the rally could prove to be short-lived unless supply from the region is materially disrupted.”