Oil resumed gains as Israel braced for a potential strike by Iran or its proxies, and traders looked ahead to an International Energy Agency report on the supply and demand outlook.
Brent rose above $90 a barrel after closing 0.8% lower in the previous session. West Texas Intermediate climbed toward $86. The US believes an attack on Israel is imminent in response to a strike on Iran’s diplomatic compound in Syria last week.
Israel Preparing An Assault on Iran
The Wall Street Journal reported Israel is preparing for an assault in the next two days, citing a person familiar with the matter.
“The threat of an Iran involvement is likely to keep an upside bias in crude oil prices for now,” 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 in geopolitical risks is avoided.”
Also Read: Oil Losses Drag as Brent Crude Goes for $78 per barrel
Escalating geopolitical tensions including Russian attacks on Ukrainian energy infrastructure have spurred bullish activity in the oil options market. There’s been elevated buying of call options — which profit when prices rise — in recent days, as implied volatility gains. Call options on Brent are still trading at a premium over the opposite put options.
Brent is Still Around 17% Higher in 2024
Crude is on track for a weekly loss but Brent is still around 17% higher this year, in part due to OPEC+ supply cuts. OPEC maintained its robust outlook for global oil demand growth for 2024 in a monthly report on Thursday, as top traders and Wall Street banks struck a more bullish tone on prices.
The IEA will provide a snapshot of the market later Friday, giving more insight into global balances, which are in focus after the group last month said markets face a supply deficit if OPEC+ continues its cuts.
Source; Bloomberg
