Oil Was Supposed To Soar On Iran Strikes—It Just Crashed Instead

Oil markets defied all expectations Monday, crashing more than 7% to $68 a barrel even as Iran launched a barrage of missiles at U.S. military installations in Qatar in retaliation for American strikes on Iranian nuclear facilities over the weekend.

Instead of triggering a surge in crude prices, typical of an escalating Middle East conflict, the attack seemed to confirm what markets have already priced in: this was a symbolic, controlled response, not the start of a full-blown war.

Iran Strikes US Bases, But Oil Plunges As Markets Shrug Off Threat

On Monday at around 1:00 p.m. ET, Iran's military declared the missile launches under the operation name “Annunciation of Victory”, targeting Al Udeid Air Base in Qatar—the largest U.S. base in the region.

Qatar temporarily closed its airspace amid the strikes, and flight-tracking services confirmed nearby UAE airspace closures as well.

But according to U.S. officials cited by Reuters, no missiles hit the base directly, and no casualties or damage were reported.

The New York Times confirmed that Iran had notified both Qatari and U.S. officials in advance, an unusual move likely intended to limit escalation and avoid fatalities.

Chart: Oil Just Had Its Worst Day Since December 2022

Markets See Symbolism, Not Escalation

The initial response from markets was decisive: West Texas Intermediate crude – as tracked by the United States Oil Fund USO – dropped more than 7%, marking its steepest daily fall since April 8 and pushing oil prices below levels seen before the Israel-Iran conflict erupted.

The market interpreted the attack as largely symbolic—matching the number of U.S. strikes on Iranian nuclear targets, but carefully calibrated to avoid serious damage.

As reported by The Kobeissi Letter on X, a popular financial newsletter and media platform, Iran’s move was "calculated and de-escalatory," designed to satisfy domestic political pressure in Iran while avoiding direct military confrontation with the U.S.

"This is a textbook buy-the-rumor, sell-the-news event," Kobeissi said, adding that the retreat in oil prices reflects fading war risk and a potential opening for diplomacy.

"The market is saying we are nowhere near World War 3."

Diplomacy Back On The Table?

The Trump administration anticipated a response from Tehran following the U.S. airstrikes on Iranian nuclear facilities over the weekend, a senior White House official told CNN on Monday.

According to the official, President Donald Trump does not currently seek further military engagement in the region, signaling a preference for containment over escalation. However, the administration remains prepared to act if necessary.

This positioning from both sides has reinforced the belief that, for now, the worst has been avoided.

With the S&P 500 trading less than 2% below record highs and oil back under $70, markets appear to be dialing down the energy shock premium—at least for now.

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