Oil prices slumped on Monday as hopes emerged of easing escalations in the Middle East despite an Israeli strike against Iranian military targets over the weekend.
Benchmark Brent crude fell over 4% as trading got underway for the week to US$72.60 a barrel.
Israel hit around 20 military bases across Iran on Saturday morning, following a strike by the latter earlier in the month.
Swissquote Bank analyst Ipek Ozkardeskaya noted that the targeting of military sites and not nuclear or oil infrastructure in the latest attack had come as a relief.
“The cherry on top, Iran didn’t vow to respond, in a clear sign of de-escalation - or at least not a re-escalation - of the tensions in the region,” she added.
President Joe Biden had told reporters “I hope this is the end” in the aftermath of the strike, prompting speculation that months of escalation could finally be scaled back.
FTSE 100 heavyweights BP PLC and Shell PLC led fallers on the index following the decline, falling by 1.6% and 1.9% respectively.
The drop offered a boost for airlines as the prospect of cheaper fuel costs emerged though, sending shares in easyJet PLC and British Airways owner International Consolidated Airlines Group SA higher.