Oil price drops as fears ease of Israel-Iran escalation

The oil price has dropped steeply as tensions in the Middle East appeared to ease.

For the first time since the very start of the month, the cost of a barrel of the benchmark oil Brent crude is below $72 at $71.93.

The oil price stood at $76 on Friday evening, before Monday morning's fall of more than 5%.

It means the cost of oil is cheaper than it has been for the vast majority of the past two years.

The cost of oil impacts the price of filling a tank with petrol or diesel and should trickle down to pump prices in about 10 days.

It comes as the threat of further conflict escalation in the Middle East appeared to lessen.

Iran and Israel have been exchanging missile strikes but the latest comments from Iranian leader Ayatollah Ali Khamenei avoided directly threatening Israel in a speech on Saturday.

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Israeli strikes on Iran over the weekend avoided hitting energy facilities, helping reassure oil markets and demonstrating restraint.

There have been a series of retaliatory strikes following Israel's killing of Iran-backed Hamas and Hezbollah leaders

Israel admitted to one of the attacks but not the killing of the Hamas leader who was visiting the Iranian capital, Tehran.

The countries had been exchanging fire ever since, sparking fear of the war spreading beyond Gaza and Lebanon.

After Iran's first hit on Israel in early October, a barrel of Brent crude rose to a recent high of $81.

A lower oil price can impact overall price rises as the fossil fuel is used in some production stage of most things.