Oil futures fell sharply, dropping more than 4% in early Monday trade, as Israeli airstrikes over the weekend avoided hitting Iran's key energy assets, such as oil fields or nuclear facilities. This eased fears of significant disruptions in Middle Eastern oil supplies, with Brent crude declining 4.27% to 72.80 dollars per barrel and WTI falling 4.45% to 68.60 dollars as of 08:30 Bulgarian time.

The airstrikes by Israeli fighter jets targeted military installations in Iran as a response to Iranian missile attacks that occurred in early October. Although the conflict has heightened geopolitical tensions, Israel’s measured response has calmed markets, fostering hope for a de-escalation in the region and averted broader fears over energy supply threats.

Volatility in oil prices has been a recurring theme this month, largely due to ongoing instability in the Middle East. Additional pressure on oil prices stems from persistent concerns over demand, with China, the world’s largest oil consumer, showing signs of economic slowdown. Weekend data revealed a drop in industrial profits in the world’s second-largest economy, even with recent government measures aimed at economic stimulus.

The oil market is also closely monitoring potential moves from OPEC+ regarding production levels, with discussions about a possible production increase from December onward. Market participants are additionally mindful of the upcoming US presidential election, which is now less than two weeks away, as it may bring further implications for the energy sector.