Oil prices slide more than 4% after Israel's 'limited' attack on Iran seen as not disrupting supplies

Oil prices slid more than 4% on Monday as Israel's strikes on Iran over the weekend were dubbed as "limited" by local media, with Citi analysts discounting chances of an escalation that disrupts oil supplies.

Futures for global crude benchmark Brent slid 4.34% to $72.75 a barrel, while U.S. West Texas Intermediate futures dropped 4.54% to $68.52 per barrel.

Israel on Saturday attacked Iran's military installations in three provinces in response to Tehran launching ballistic missiles at Israel on Oct. 1.

Iranian News agency Tasnim reported the attack, which killed four soldiers, had inflicted "limited damages." The strike steered clear of oil, nuclear, and civilian infrastructure locations. Local petro news network said that Iran's oil industry operation is "underway normally" with no disruptions.

For weeks, markets had braced themselves for an Israeli retaliation as Middle East tensions have continued to rise following the attack on Israel by Iran-backed Hamas on Oct. 7 last year.

Oil markets' key consideration had been a direct engagement between both parties, with concerns of an attack on Iranian oil facilities rising in recent weeks. Iran accounts for up to 4% of global oil supplies, according to the U.S. Energy Information Administration.

"The recent Israel military action is unlikely to be seen by the market as leading to an escalation that impacts oil supply," Citi analysts wrote in a note on Monday, cutting the bank's Brent oil forecast by $4 to $70 per barrel over the next three months.

Oil markets are also staring at an oversupply. "With Israel deliberately, and perhaps with some American encouragement, avoiding the targeting of crude oil facilities, the oil market is back to looking at an oversupplied market," said