Overnight, crude oil surged higher as news broke of explosions around an airfield in Isfahan in Iran. Israel is widely considered responsible, but has yet to comment. The limited strike is thought to be the Israeli response to Iran’s direct attack on the country last weekend. Iran has played down news of the strike, and it currently feels as if this won’t be the precursor to an escalation in hostilities. Both WTI and Brent rallied around 3% in the immediate aftermath of the breaking news. But those gains steadily evaporated over the course of this morning, and at the time of writing, both Brent and WTI are unchanged from yesterday’s closes. This means that crude is continuing to slide back towards significant support which comes in at $80 and $85 for WTI and Brent respectively. This price action is further evidence that the market is relatively unconcerned with the ongoing hostilities across the Middle East. Instead, it is more exercised over the outlook for global demand growth for this year and beyond. China’s economy is not recovering as sharply as many investors had hoped. This weighs heavily on the price of oil as China is not only the world’s second largest economy, behind the US, but also the world’s largest importer of crude. Investors are also pricing in the likelihood that interest rates in the US and elsewhere are likely to stay higher for longer. This should weigh on economic growth going forward, and thereby dampen crude demand growth.