Oil prices rose to their highest since October as Israel braced for a possible attack by Iran, a development that will cause major disruptions in a region that accounts for a 3rd of worldwide crude oil production.
An attack is anticipated as soon as the following 48 hourswhich might mean a big expansion of the conflict that began with Hamas’ attack on Israel October. Global benchmark Brent rose as much as 2.7% to above $92 a barrel, a level last seen within the early days of the war. The US benchmark West Texas Intermediate rose as much as 3.1% to above $87.
Israel Expects a drone or missile attack on government targets inside days, either directly or from Iranian proxies, people acquainted with Western intelligence assessments said. The move has still not been approved by Tehran’s top officials, people said, while the US has deployed additional military assets to the region.
“Direct Iranian involvement increases the likelihood of a possible supply disruption in the region, leading many traders to continue reaching for exposure to crude oil and rising crude call options,” said Rebecca Babin, senior energy trader at CIBC Private Wealth. “Faced with a weekend of significant headline risk, there are few sellers willing to step in and sell the rally.”
Oil prices have risen about 19% this yr because the Middle East conflict bolsters a supply-constrained market stronger than expected demand.
Escalating geopolitical tensions – including attacks by Ukraine on Russian energy infrastructure – have fueled bullish activity within the oil options market. There has been increased buying of call options – which profit from rising prices – in recent days, with implied volatility rising to a two-month high. Brent options are still trading at a premium to bearish puts.
