Oil prices plunge after Iran retaliates with attack on American air base

The price of West Texas Intermediate, the U.S. benchmark for crude oil, fell 7.2 percent to $68.51 per barrel on Monday

The price of oil plunged Monday after Iran retaliated against U.S. attacks on its nuclear sites by hitting an American air base.

Under the leadership of President Donald Trump, the military bombed three nuclear sites early Sunday in Iran, joining Israel in its fight against Tehran gaining access to nuclear weapons.

On Monday, Iran launched missile strikes on a U.S. air base in Qatar, which traders saw as a sign the country did not plan to retaliate with something far greater — cutting off the flow of oil by striking crude shipments.

“When the response comes and it is muted, oil drops,” Tom Kloza, chief market strategist at consultancy Turner Mason & Co, told The Associated Press. “This rivals some of the historic selloffs.”

The price of oil plunged Monday after Iran retaliated against U.S. attacks on its nuclear sites by hitting an American air base (Getty Images)

There's still plenty Iran could do to push prices back up, and the markets could be getting it all wrong. But oil analysts say there are plenty of reasons fear has receded.

The price of West Texas Intermediate, the U.S. benchmark for crude oil, fell 7.2% to $68.51 percent per barrel on Monday after Iran announced a missile attack on Al Udeid Air Base in Qatar, which the U.S. military uses.

Traders were relieved because Iran said it had matched the number of bombs dropped by the U.S. on Iranian nuclear sites this weekend, a possible sign of a desire to de-escalate the conflict.

On Monday evening, Trump claimed that Israel and Iran agreed to “a Complete and Total CEASEFIRE,” in a Truth Social post. Israel and Iran did not immediately respond or confirm following the president’s post.

Markets were initially nervous as oil futures opened for trading Sunday.

The price of Brent crude jumped 4 percent as traders anxiously watched the Strait of Hormuz, a waterway on Iran's southern border that legislators in Tehran were demanding be closed in retaliation. That would have hit the global economy very hard because much of the world’s crude and liquefied gas passes through it.

The drop in oil Monday brings the price back to where it was before fighting between Iran and Israel began over a week ago, when a barrel of U.S. crude was just above $68.

That's good news for Trump, who wants the Federal Reserve to stop worrying about inflation and start cutting interest rates. It's also good for motorists this summer if the trend holds.

Drivers were already paying higher prices at the pump before the U.S. attack. The average price nationwide is $3.18 per gallon, according to GasBuddy surveys, about 10 cents more than two weeks ago.