Oil prices experienced a significant decline on October 28, 2024, plunging over 6% after Israel's recent military strikes against Iran did not target the country's oil production infrastructure. This marked the largest drop in oil prices in two years, with West Texas Intermediate (WTI) futures closing at approximately $67.38 per barrel and Brent crude at around $71.42 per barrel.

The Israeli military conducted a series of strikes on Iranian military sites as a response to Iran's missile attacks on Israel earlier in October. Notably, these strikes specifically avoided Iranian oil and nuclear facilities, which had been a major concern for oil markets leading up to the attack.

The market reacted swiftly to the news that Iran's oil infrastructure remained intact, easing fears of a broader conflict that could disrupt oil supplies. Analysts noted that this limited military operation might reduce the geopolitical risk premium that had previously inflated oil prices. For instance, Citi analysts revised their Brent price forecast down from $74 to $70 per barrel for the fourth quarter, reflecting diminished concerns over supply disruptions.

The decline in oil prices also coincided with broader economic concerns, particularly regarding weak demand from China, which has been affecting global oil consumption forecasts. Recent data indicated a significant drop in China's industrial profits, further contributing to bearish sentiment in the oil markets.

The Israeli strikes and their aftermath suggest a temporary easing of tensions in the Middle East that could stabilize oil prices in the short term. However, analysts caution that ongoing geopolitical dynamics and economic conditions will continue to influence market behaviour. The situation remains fluid, with potential for future developments depending on Iran's response and broader regional stability.