Oil prices likely to fall after Israel shows restraint in strikes on Iran

Oil prices are expected to fall when trading resumes on Monday as Israel's retaliatory strike on Iran over the weekend bypassed Tehran's oil and nuclear infrastructure and did not disrupt energy supplies, analysts said.

Brent and U.S. West Texas Intermediate crude futures gained 4% last week in volatile trade as markets priced in uncertainty around the extent of Israel's response to the Iranian missile attack on Oct. 1 and the U.S. election next month.

Scores of Israeli jets completed three waves of strikes before dawn on Saturday against missile factories and other sites near Tehran and in western Iran, in the latest exchange in the escalating conflict between the Middle East rivals.

Iran on Saturday played down Israel's overnight air attack against Iranian military targets, saying it caused only limited damage.

Tchilinguirian expects geopolitical risk premium that had been built into oil prices to deflate rapidly with Brent heading back towards $74-$75 a barrel.

UBS commodity analyst Giovanni Staunovo also expects oil prices to be depressed on Monday as Israel's response to Iran's attack appeared to have been restrained.