Oil holds above $90 on fears of Middle East tensions escalating
Middle East prompt a dramatic repricing of geopolitical risks.
Fears of a wider region conflict are rising, with Israel increasing preparations for an attack from Iran in retaliation for its strike on the country's diplomatic compound in Syria. Limiting crude's gains were US jobs data that beat expectations and strengthened the dollar.
«The market now knows that some kind of retaliation from Iran will likely come — but it doesn't know when and where and what — and that creates a great discomfort and nervousness,» said Bjarne Schieldrop, chief commodities analyst at SEB AB.
Global benchmark Brent and US benchmark West Texas Intermediate were both up less than 1%. The rising tensions have also spurred activity in the oil options market, with volatility surging and bullish calls trading at a rare premium to bearish puts.
Oil has surged this year as geopolitical concerns in the Middle East further bolstered a market shaped by supply restrictions and stronger-than-expected demand. The conflict between Israel and Hamas had led to Houthi attacks on shipping in the Red Sea, raising transport costs, but so far hasn't escalated into a wider war in a region that accounts for around a third of the world's supply. Cease-fire talks between Israel and Hamas — which could see the release of hostages held in Gaza — remain deadlocked.
Earlier this week, OPEC+ chose to stick with supply cuts for the first half of the year, which means roughly 2 million barrels a day of
