HomeBusinessOil gains again as Israel prepares for a possible attack on Iran

Oil gains again as Israel prepares for a possible attack on Iran

(Bloomberg) — Oil rose again as Israel braced for a possible attack from Iran or its allies, and traders looked ahead to a report from the International Energy Agency on the outlook for supply and demand.

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Brent climbed above $90 a barrel after closing 0.8% lower on Thursday. West Texas Intermediate rose toward $86. The US believes that an attack on Israel is imminent, in response to an attack on the Iranian diplomatic compound in Syria last week. The Wall Street Journal reported that Israel is preparing for an attack in the next two days, citing a person familiar with the matter.

“The threat of Iranian involvement is likely to maintain an upward trend in crude oil prices for the time being,” said Charu Chanana, an analyst at Saxo Capital Markets Pte in Singapore. “But the recent rally could remain at risk of consolidation or reversal if further escalation of geopolitical risks is avoided.”

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Escalating geopolitical tensions, including Russian attacks on Ukraine’s energy infrastructure, have fueled bullish activity in the oil options market. There has been increased buying of call options – which benefit when prices rise – in recent days as implied volatility increases. Call options on Brent continue to trade at a premium to the opposite put options.

Crude oil is on track for a weekly loss, but Brent is still up about 17% this year, partly due to OPEC+ supply cuts. OPEC maintained its robust outlook for global oil demand growth through 2024 in a monthly report on Thursday, after top traders and Wall Street banks struck a more bullish tone on prices.

The IEA will provide a market snapshot later Friday that will provide further insight into global balances, which are in focus after the group said last month that markets will face a supply crunch if OPEC+ continues its cuts.

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