NYMEX crude futures fall nearly $4 on open as Israel's strikes on Iran avoid oil infrastructure

NYMEX crude futures tumbled on the open Oct. 27 as Israel's Oct. 25 strikes against Iran did not target oil infrastructure.

NYMEX front-month crude opened at $68.98/b, down $2.80 from the Oct. 25 settle, and soon fell to $67.79/b.

Crude futures had settled higher Oct. 25 on expectations that Israel would respond to Iran's Oct. 1 missile attack, and possibly target oil infrastructure. Israel launched a strike on Iran after the market close Oct. 25 but did not hit any energy facilities.

"That neither oil fields nor oil infrastructure were targeted suggest this incident is bearish for global crude prices," S&P Global Commodity Insights analysts said. "We maintain that the conflict will have limited impact on prices unless oil assets come under attack, either in Iran or elsewhere in the region."

Still, the analysts said, "the three targeted regions in Iran are home to a significant portion of Iranian oil infrastructure, in particular the oil fields of Khuzestan and refineries in Ilam and Tehran."

Iran said Oct. 27 it would respond to the Israeli strikes, but also said it did not seek war, according to CNN reports.

Iranian officials have prepared several responses to an Israeli attack depending on the targets, including disrupting the flow of energy commodities and shipping in the Persian Gulf and Strait of Hormuz if Israel launches a major assault on Iranian infrastructure, according to a New York Times report Oct. 25.

Nearly 14 million b/d of crude oil and 5 million b/d of refined product exports transit the Strait of Hormuz or Gulf of Oman.

Crude futures rallied in early October following the Oct. 1 Iranian missile attack on Iran on expectations that Israel might strike Iranian oil facilities. NYMEX crude climbed nearly $9 to $77.14/b by Oct. 7.

However, by mid-October NYMEX crude slipped to the $70/b level on media reports that Israeli Prime Minister Benjamin Netanyahu told the US that Israel will limit its response to targeting Iranian military installations.

US Secretary of State Antony Blinken arrived in Doha Oct. 24 and announced the resumption of Gaza war ceasefire talks in coming days. Qatar and Egypt are mediating the conflict.

"Should Israel accept a ceasefire, it would likely reject Hamas as Gaza’s governing authority and probably condition Gaza’s reconstruction on the disarmament of all militant groups, with the [Israel Defense Forces] — or a third-party force — deployed along the Gaza-Egypt border to prevent Hamas’ rearmament," said Kevjn Lim, analyst with S&P Global Market Intelligence, in a report. "Without a ceasefire, we expect low-intensity Israeli military operations to continue into 2025, with infrequent, low-volume rocket fire into southern Israel."