(Bloomberg) -- Oil opened the week lower as the market waited to see if Israel would retaliate against Tehran for a missile attack last week, with President Joe Biden discouraging a strike on Iran’s crude fields.

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Brent slipped below $78 a barrel after jumping the most since January 2023 last week, while West Texas Intermediate was near $74. Biden said on Friday that he didn’t know when an Israeli response would come, but “I’d be thinking about other alternatives than striking oil fields.”

Iran’s attack on Israel has raised fears over an all-out war in the Middle East, and prompted a flurry of action in the options market. Still, questions about the demand outlook — especially from No. 1 importer China — and oversupply continue to hang over the market.

The Middle East remains on edge, with Israel sending troops back into northern Gaza over the weekend and keeping up aerial attacks and limited ground maneuvers in Lebanon. Iran’s oil output has returned to almost full capacity and could be vulnerable as tensions escalate.

The market is “in a waiting game for now,” as traders wait for clarity over developments in the Middle East, said Yeap Jun Rong, a market strategist for IG Asia Pte in Singapore. Any hit to Iran’s energy infrastructure “may see Brent crude prices head above the $80 level.”

Options markets for oil continue to retain their bias toward bullish call options — which profit buyers when futures gain. A gauge of implied volatility for Brent was near the highest level in almost a year, while money managers have added more net-long positions for the global benchmark.

Goldman Sachs Group Inc. predicted Brent could surge to the $90s if Iran’s oil supply is disrupted, according to a note from analysts including Daan Struyven. However, JPMorgan Chase & Co. said attacking Tehran’s energy facilities wouldn’t be the preferred course of action.

Saudi Arabia, meanwhile, raised its main oil price for buyers in Asia by a greater-than-expected amount, while simultaneously cutting prices of all grades exported to the US and European markets.

China’s top economic planner will hold a press briefing on Tuesday to discuss a package of policies aimed at boosting economic growth, according to a notice from the government on Sunday. Expectations are rising among analysts for Beijing to expand public spending as part of its stimulus package.

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