Analysts are predicting a surge in oil prices on Monday following Iran's attack on Israel over the weekend. The attack, which involved explosive drones and missiles, was in retaliation for an alleged Israeli strike on Iran's consulate in Syria earlier this month. This marks the first direct attack on Israeli territory by Iran, heightening fears of a potential regional conflict.

In the wake of the attack, concerns over Iran's response have buoyed oil prices. Global benchmark Brent crude reached $92.18 a barrel on Friday, its highest level since October. Similarly, U.S. West Texas Intermediate crude futures rose to $85.66. However, trading remained closed on Sunday.

Experts expect oil prices to strengthen when trading resumes. Tamas Varga, an oil broker at PVM, stated, "It is only reasonable to expect stronger prices when trading resumes." Despite Iran's assurance that "the matter can be deemed concluded," Varga cautions that any price rally may be short-lived unless there is a significant disruption in regional oil supply.

The global community has swiftly responded to the attack. U.S. President Joe Biden called for a meeting with leaders of the Group of Seven major economies on Sunday to coordinate a diplomatic response. Analysts, such as Giovanni Staunovo from UBS, anticipate an initial spike in oil prices, especially with this being the first time Iran has launched an attack on Israel from its own territory. The duration of the price surge, however, will largely depend on Israel's response and any potential targeting of Iranian crude exports during the G7 virtual meeting.

Notably, Iran has increased its oil exports, its main source of revenue, under the Joe Biden administration. The previous administration, led by Donald Trump, had heavily reduced these exports through imposing sanctions. The Biden administration states it is not encouraging Iran to further increase exports and is enforcing sanctions. Any reduction in Iranian exports could lead to a further climb in oil prices and gasoline costs within the United States - a significant concern ahead of the forthcoming presidential election rematch between Trump and Biden.

Finally, the impact on shipping through the Strait of Hormuz, an essential route for approximately one-fifth of the world's oil consumption, is another key factor to watch. Ole Hansen, a strategist at Saxo Bank, explains that the risk premium for crude prices already exists but could widen depending on developments near Iran, particularly around the Strait of Hormuz.

As the situation unfolds, analysts and market participants remain cautious about the potential long-term effects of the attack on oil prices, regional stability, and global energy security.