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Brent crude oil has dropped by 0.5% this morning, to $90 per barrel, a subdued reation which suggests markets believe the fallout from Iran’s strike on Israel will be contained.
Oil has risen this year, up from $75/barrel at the start of January, indicating that a geopolitical price premium had already been built into the cost of energy.
Israel’s government’s potential response is still extremely uncertain. The stakes are high. Significant retaliation could lead to a wider conflict, consequently triggering a rally in oil prices, robust demand for the US dollar, and renewed buying of gold.
