Oil falls 5% after Israel's counterattack on Iran; Brent crude drops to $71.92 per barrel

By 1445 GMT, Brent crude futures had dropped $4.13, or 5.43%, to $71.92 per barrel, while US WTI crude fell $4.04, or 5.63 percent, to $67.74 per barrel.

Both benchmarks hit their lowest levels since October 1 during the trading session's opening.

Last week, oil prices had surged 4 percent amid market volatility driven by uncertainty over the US election and speculation about Israel’s possible response to Iran’s October 1 missile strike.

Israel conducted three pre-dawn waves of airstrikes on Saturday, targeting missile production facilities and military sites near Tehran and across western Iran.

These strikes marked a sharp escalation in Israeli-Iranian tensions but were more focused on military objectives than initially expected by US officials, reducing fears of attacks on Iran's nuclear or oil infrastructure.

Analysts observed that the risk premium factored into oil prices began to fade following the limited scope of Israel’s retaliatory action.

Citi lowered its Brent crude price forecast for the next three months to $70 per barrel from $74, citing reduced geopolitical risk in the near term, as per a note led by Max Layton.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies left their oil production policy unchanged last month, with plans to increase output in December.

The group is scheduled to reconvene on December 1 for further discussions.

Despite the de-escalation in oil markets, tensions between Israel and Iran remain high.

Iranian Foreign Ministry spokesperson Esmaeil Baghaei warned on Monday that Iran would "use all available tools" in response to Israel’s latest military actions.