Oil Rises To October High As Israel Prepares For Iranian Attack
Oil jumped to the highest level since October on news that Israel is bracing for a possible attack from Iran or its proxies.
(Bloomberg) -- Oil jumped to the highest price since October as Israel braced for a possible attack from Iran, a development that would threaten major disruptions in a region that accounts for a third of the world’s crude output.
An assault is expected to come as soon as the next 48 hours, which would mark a significant widening of the conflict that started when Hamas attacked Israel in October. Global benchmark Brent surged as much as 2.7% to top $92 a barrel, a level last reached during the early days of the war. US benchmark West Texas Intermediate climbed as much as 3.1% to surpass $87.
Israel is expecting a drone or missile attack on government targets within days, either directly or from Iran’s proxies, people familiar with Western intelligence assessments said. The move still hasn’t been approved by Tehran’s highest-ranking officials, the people said, while the US has moved additional military assets into the region.
Read More: Israel Bracing for Potential Direct Attack From Iran in Days
“Direct Iranian engagement puts higher odds of a potential supply disruption in the region, causing many traders to continue to reach for exposure in crude and upside crude call options,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “Heading into a weekend with significant headline risk, there are few sellers willing to step in and sell the rally.”
Oil has surged about 19% this year as the Middle East conflict bolsters a market shaped by supply restrictions and stronger-than-expected demand.
The escalating geopolitical tensions — also including attacks on Russian energy infrastructure by Ukraine — have spurred bullish activity in the oil options market. There has been elevated buying of call options — which profit when prices rise — in recent days, with implied volatility jumping to a two-month high. The options on Brent are still trading at a premium over bearish puts.
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