Oil sinks on de-escalation hopes despite Iran strike

World oil prices sank Monday as traders bet on de-escalation in the Middle East despite a strike on Israel by key crude producer Iran.

Brent and WTI prices shed one percent while global stock markets diverged.

Iran late on Saturday unleashed more than 300 ballistic and cruise missiles and attack drones — which were mostly repelled by air defences — in retaliation for Israel's bombing of its Syrian consulate earlier this month.

Tehran said the aerial strike was a legitimate defensive response to the deadly attack in Damascus, adding that "the matter can be deemed concluded".

Israel, the United States and other allies intercepted nearly all launches in the attack — which had been widely trailed and was the first direct Iranian military action against arch foe Israel.

Haven investment gold held firm Monday after reaching a record peak of $2,431.52 before the weekend.

The dollar steadied after touching a 34-year high against the yen.

"The market sees de-escalation as the most likely path despite the Iranian strike," noted analysts at DNB Markets.

"The attack was well announced, with Israel and its allies fully prepared, it caused minor damage and no casualties, and with Iran quickly out saying that 'the matter can be deemed concluded'. A clear invitation to de-escalate."

Experts said the limited scope of the attack showed Iran was seeking to make a show of strength with its attack, but without sparking a conflict.

U.S. President Joe Biden was reported to have cautioned Israeli Prime Minister Benjamin Netanyahu to "take the win" and forego a counterattack.

Nevertheless, Asian equities mostly fell Monday on fears of a broader conflict in the volatile Middle East, although Shanghai stocks jumped...

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