On Monday, crude prices dropped by over $1 per barrel after Israeli officials said they did not want to drag the Middle East into a full-scale war while responding to a rocket attack in the Golan Heights during the weekend.
Brent futures for delivery in September dropped $1.39 to $79.74 per barrel, a fall of 1.7%. U.S. crude fell $1.40 to $75.76 per barrel, a decline of 1.8%.
On Monday, two Israeli officials told Reuters that Israel wanted to attack the Iranian-backed Lebanese group Hezbollah without it leading to a region-wide conflict.
On Sunday, Prime Minister Benjamin Netanyahu’s government was authorized by Israel’s security cabinet to decide on the timing and manner of a response to an attack on a football field.
Israel said it would retaliate in Lebanon against Iran-backed Hezbollah, which denied being responsible for the attack. On Sunday, Israeli jets attacked targets in southern Lebanon.
Although the tensions fueled investor worries about the possible impact on crude output from the biggest oil-producing region in the world, output has so far not been affected.
UBS analyst Giovanni Staunovo said the lack of any supply disruptions limited positive price reaction despite renewed geopolitical tensions in the Middle East.
