<a href="https://www.thenationalnews.com/business/energy/2024/09/05/opec-countries-to-extend-voluntary-cuts-for-two-more-months/" target="_blank">Oil prices </a>dropped by 6 per cent on Monday after Israeli strikes on Saturday focused on military targets in Iran, avoiding Tehran's energy facilities, easing concerns of geopolitical tensions affecting supply. <a href="https://www.thenationalnews.com/business/economy/2024/09/04/saudi-arabia-non-oil-growth-to-moderate-in-2024-imf-says/" target="_blank">Brent</a>, the benchmark for two thirds of the world's oil, was trading 6.13 per cent lower at $71.48 a barrel at 5.39pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was down 6.37 per cent at $67.21 a barrel. Crude has plunged as the “Middle East war risk premium” has evaporated, Vandana Hari, chief executive of Singapore-based Vanda Insights said in a note on Monday. Both benchmarks ended higher last week driven by concerns about Middle East <a href="https://www.thenationalnews.com/business/energy/2024/10/14/oil-falls-on-uncertainty-over-chinas-stimulus-plan-despite-geopolitical-risks/" target="_blank">supply disruptions</a>, despite signs of weakening demand in some markets. Scores of Israeli jets completed three waves of strikes before dawn on Saturday against missile factories and other sites near Tehran and in western Iran, Israel's military said. It was in retaliation for Iran's attack on Israel with about 200 ballistic missiles on October 1. Israel warned Iran against responding. “Geopolitical risk premia tend to fade in oil if there are no supply disruptions. Hence the reaction we are seeing, but some of the magnitude of the sell-off might be due to lower market liquidity during Asian hours,” Giovanni Staunovo, strategist at UBS, told<i> The National</i>. “I believe the market risk premium was not high before either.” Brent had soared after Iran’s missile attack on Israel but most of those gains have been erased as demand concerns over slowing Chinese growth have overshadowed supply fears. “As such, the geopolitical tensions that were keeping the oil bulls on alert near the $70 per barrel level has gone up in smoke,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. The measures announced by China earlier in the year to support its economy have “had no material impact and growth in China is still being challenged”, she said. Chinese industrial profits fell 3.5 per cent from January to September. “The medium-term outlook is bearish and oil bears will certainly make another attempt on the $65 per barrel level in US crude and challenge the $70 per barrel support in Brent crude,” Ms Ozkardeskaya said. As concerns about Iran's oil supply have eased, “market focus is shifting back to the risks of oversupply in 2025“, Goldman Sachs said in a report on Tuesday. It expects Brent to continue trading in the $70 to $85 per barrel range. “We still forecast roughly flat oil prices in 2025 as the boost from a reversal in low valuation offsets the drag from a moderate 0.7 million bpd surplus.” The market’s focus probably will now shift to the upcoming decision of the eight Opec+ member states with voluntary production cuts, Mr Staunovo said. “I still see the oil market as being undersupplied and think prices have more to recover from current levels.” Commodity price volatility is rising and has further to run, MUFG Research said in a note on Thursday. “Oil prices face two-sided risks – bullishness from potential geopolitical supply disruptions in the Middle East, against bearishness from Opec+ likely ramping up its barrels into what is already set to be a surplus market in 2025,” it said. “Notwithstanding the fog of geopolitical uncertainty surrounding Middle Eastern risks, the “lower-for-longer” mantra is firming for oil prices.” If former president Donald Trump wins the US elections, it “could mean a stronger US dollar ahead, and with it another headwind for oil prices”, MUFG said. Meanwhile, supply from non-Opec+ members is also rising, affecting oil prices. Non-Opec+ oil supply, driven by the Americas, is set to rise by 1.5 million barrels a day this year and next, with the US, Brazil, Guyana and Canada contributing more than 1 million bpd annually, the International Energy Agency said in its oil market report this month.