Crude Oil Prices Tumble As Iran’s Strike Against US Bases In Qatar Not Expected To Impact Supplies

Crude oil prices tumbled as much as 6% on Monday after a string of missile attacks by Iran against U.S. bases in Qatar, as analysts see the risk of supply disruptions blowing over.

U.S. West Texas Intermediate (WTI) futures traded 6% lower at $69.41 per barrel at the time of writing, while Brent futures fell 5.6% to $71.25 per barrel.

“Oil flows for now aren't the primary target and is likely not to be impacted, I think it's going to be military retaliation on US bases and/or trying to hit more of the Israeli civilian targets,” John Kilduff, a partner at Again Capital, told Reuters.

Qatar’s foreign ministry confirmed that Iran’s Islamic Revolutionary Guard Corps launched missiles aimed at the Al-Udeid Air Base. “We consider this a flagrant violation of the sovereignty of the State of Qatar, its airspace, international law, and the United Nations Charter,” Qatar’s Foreign Minister Majed Al Ansari said in a post on X.

Iran’s move to close the Strait of Hormuz still remains a threat to crude oil supplies – if the country announces a block, it could send crude oil prices soaring by 40%, according to the analysts at Goldman Sachs.

Even if Iran halves the supplies through the Strait of Hormuz for a month, it could push crude oil prices to over $110 a barrel, according to the brokerage.

Iran is the third-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC) cartel, and the Strait of Hormuz accounts for nearly a fifth of the world’s oil supplies.

The Strait is also the primary export route for major oil producers, including Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Bahrain, and Iran itself.

Meanwhile, crude oil ETFs fell more than 9% on Monday, paring most of their earlier gains.

The United States Oil Fund LP (USO) was down almost 6%, while the ProShares Ultra Bloomberg Crude Oil (UCO) was trading more than 9% lower at the time of writing.

Stocktwits data shows the retail sentiment with respect to the USO and UCO ETFs was in the ‘extremely bullish’ territory over the past week.

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Also See: Israel-Iran Conflict: ‘Very Significant Damage’ Expected At Iran’s Fordow Nuclear Site, Says IAEA Chief