According to The Washington Post, two informed officials revealed that Israeli Prime Minister Netanyahu told the Biden administration in a call that he plans to target Iran's military facilities instead of oil or nuclear facilities, implying that Israel will take more limited retaliatory measures to prevent a full-scale 'war.' This is the first call between Biden and Netanyahu in months of ongoing tense relations.

Informed officials said that Israel's retaliatory actions will be adjusted to avoid giving the impression of 'political interference in U.S. elections.' This indicates that Netanyahu understands that the scope of Israeli attacks could reshape the presidential election landscape. Influenced by this news, international oil prices fell $2 at the end of Monday, with losses widening to 4.5% at one point. On Tuesday's opening, international oil prices continued the pre-dawn decline, with WTI crude oil opening down $0.45 at $70.93 per barrel.

The Washington Post now seems to attribute this to a victory for Biden's diplomacy, reporting: 'One U.S. official said that Netanyahu was more conciliatory in this discussion than before. Both officials said that after Biden decided to send a powerful missile defense system to Israel, the Israeli prime minister's position significantly softened.' Reports over the weekend stated that the U.S. would send the THAAD missile defense system to Israel to counter Iran, including U.S. military personnel.

Rohan Reddy, Director of Global X Management's International Business Development and Corporate Strategy, said, 'The market's reaction may be to temporarily cancel or reduce the geopolitical risk premium on oil.'

In recent weeks, crude oil prices have been on a rollercoaster ride due to the prospects of escalating conflicts in the Middle East. With geopolitical tensions threatening production in the region that supplies about a third of the world's oil, WTI crude oil prices this month have risen by around 8%. Iran's daily crude oil production has been around 3.3 million barrels in recent months, making it the third largest producer in OPEC.

In the options market, traders have been preparing for Israel's response to Iran's ballistic missile attack on October 1. For WTI crude oil, the premium between call and put options is the widest since the 2022 Russia-Ukraine conflict erupted. Last week, trading volume for Brent crude oil options hit the second highest record, with the week before setting a record for the highest single-week volume.

Scott Shelton, an energy expert at TP ICAP Group Plc, said: "In my view, the market fundamentals are quite bad, but still influenced by geopolitics and likely to continue to be so."

Iranian Foreign Minister Abbas Araghchi visited Iraq last Sunday, Oman on Monday, aiming to dissuade the region from retaliating against Israel. He visited Saudi Arabia and Qatar last week. If Israel damages Iran's most critical oil assets, nearly 2 million barrels of crude oil could be removed from the global market daily, causing some traders to speculate that oil prices will return to the three-digit range. The last time oil prices broke the $100 mark was shortly after the full-scale conflict between Russia and Ukraine in February 2022.

Avner Cohen, a professor of non-proliferation and terrorism studies at the Middlebury Institute of International Studies at Monterey in the USA, believes that with less than a month before the US presidential election, Washington will increase pressure on Benjamin Netanyahu, and Israel's retaliation may be more symbolic to avoid forcing Tehran into further escalation, attracting intervention from Arab neighbors and the USA.

"Neither country (Iran and Israel) wants to create a full cycle of violence leading to a war of attrition." He said: "This is not good for either country, and may compel US intervention, bringing greater chaos to the Middle East. At the same time, there is no communication between the two sides, no clear red lines, and very few intermediaries who can influence both sides. Therefore, the likelihood of mistakes is very high."

In summary, with Israel already engaged on multiple fronts, particularly in military clashes with the Iran-backed Hezbollah in Lebanon, everything is uncertain. Within Netanyahu's security cabinet, many hawks still urge Israel to take a tough stance. Additionally, Netanyahu has been talking for years about destroying Iran's nuclear program.