Oil prices fell sharply after Iran targeted US bases but avoided energy infrastructure

Oil prices crashed on Monday after markets reacted to Iran’s latest missile attacks by betting the country won’t mess with energy infrastructure.

Brent fell almost 6%, landing at $71.11 per barrel, just hours after hitting $81.40. West Texas Intermediate followed the same path, dropping under $70 and wiping out gains made over the last 10 days.

That spike had started when Israel launched a surprise strike on Iranian nuclear and air defense sites eleven days ago, triggering fears of direct retaliation from Tehran.

Iran fired missiles at Al Udeid air base in Qatar, where 10,000 U.S. troops are based. The government in Doha said it blocked the strikes. Another wave of missiles targeted U.S. military positions in Iraq.

But what mattered most to traders was what Iran didn’t do: they didn’t touch oil pipelines, tankers, or refineries. And that’s why prices nosedived. According to reporting by the Financial Times, the strikes were seen as a move to respond without risking escalation around energy assets.

Iran copies 2020 playbook

Michael Alfaro, chief investment officer at Gallo Partners, called Iran’s move “well telegraphed” and said it sent a clear signal that the country is “less likely to weaponize oil.” He said the broader market still looks supplied, and even if tension stays high, that doesn’t mean supply gets tight.

Rory Johnston, who tracks the oil market at Commodity Context, said what happened reminded him of January 2020, when Iran launched missiles at U.S. bases in Iraq after Washington killed its top general. That time, like now, Iran gave advance notice through indirect channels so that the U.S. could move troops out of harm’s way. Rory said Monday’s oil sell-off looked like a direct response to a similar “de-escalatory” signal.

Despite loud calls from some Iranian hardliners to shut down the Strait of Hormuz, Tehran hasn’t done that. That waterway handles roughly 25% of all seaborne oil shipments in the world. For now, tankers are still moving.

Trump demands drillers lower oil prices

Even with the price drop, tension in the Gulf has Washington rattled. President Donald Trump posted on Truth Social, ordering U.S. oil companies to flood the market.

“EVERYONE, KEEP OIL PRICES DOWN. I’M WATCHING! YOU’RE PLAYING RIGHT INTO THE HANDS OF THE ENEMY. DON’T DO IT!” he wrote. Then added: “To The Department of Energy: DRILL, BABY, DRILL!!! And I mean NOW!!!”

But there’s not much he can do. Most U.S. oil production comes from private land. Federal control over output is minimal. Bob McNally, head of Rapidan Energy and former energy adviser to President George W. Bush, said presidents have “limited options” to push prices down. He said the best way forward is “to dissuade Iran from pulling the oil trigger: from attacking or disrupting Gulf energy production flows.”

The Trump administration is still weighing moves. Joe Biden, during his presidency, tapped into the Strategic Petroleum Reserve in 2022 to try to lower prices after Russia invaded Ukraine. That helped eventually, but it wasn’t fast.

Right now, Middle East supply remains untouched. But markets are watching closely. The fact that Iran stuck to military targets and left oil routes open tells investors one thing: Tehran wants to show force, not push prices into chaos. For now, that’s enough to keep barrels moving and prices in check.

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