Oil Prices Pare Gains after Iran Downplays Explosions in Isfahan

Oil prices erased most of the gains in the early morning on Friday after Iran appeared to downplay the explosion in Isfahan that was previously reported as an attack by Israel.

The international benchmark Brent crude briefly sank into negative territory in the late afternoon session of the Asian markets, dropping $0.01 or 0.01% to $87.10 a barrel. Meanwhile, the West Texas Intermediate (WTI) rose slightly by $0.17 or 0.21% to $82.90 a barrel. Oil prices were up as much as 4.2% at one point this morning.

ABC News later reported, citing a U.S. official, that the explosion in Iran was indeed caused by Israel. This development has captured the attention of investors who have been closely monitoring Israel’s response to the Iranian drone attacks on April 13. The geopolitical risk premium in oil prices had been easing throughout the week, with expectations that any Israeli retaliation against Iran would be tempered by international pressure.

Meanwhile, Reuters reported that an Iranian official told its reporter on Friday that explosions heard in Isfahan were a result of the activation of Iran’s air defence systems. The official confirmed that there was no missile attack against Iran.