In the latest news regarding the tensions between Iran and Israel, the impact on oil prices has been closely watched by investors. Despite direct strikes between the two countries, oil prices only dropped by 3%, with U.S. oil futures closing at $83.14 a barrel, the lowest since late March.
Investors are breathing a sigh of relief as Israel’s limited retaliatory strike is seen as a signal of de-escalation, erasing the risk premium associated with the Iran-Israel tensions. The market seems to believe that the risk of a full-blown war is low, as concerns about a war are high but the bar for all-out conflict is also high in the Middle East.
There has been international pressure on Israel to show restraint, and it seems to have worked, as analysts suggest that a sustained war between Israel and Iran is difficult to imagine. John Kilduff from Again Capital notes that attacks in the Middle East are usually handled diplomatically without affecting oil supplies.
Overall, the situation between Iran and Israel is being closely monitored, with the possibility of further escalation still looming. However, for now, it seems that the market is reacting positively to the limited nature of the recent strikes and the hope for a diplomatic resolution to the tensions in the region.
For more updates on this developing story, stay tuned to KP INSIDER.
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