Brent crude climbed above US$90 a barrel for the first time since October as the conflict in the Middle East showed signs of escalating.

The global benchmark spiked as much as 2.2 per cent after Israeli Prime Minister Benjamin Netanyahu said at a security cabinet meeting that his country will operate against Iran and its proxies and will hurt those who seek to harm it. President Joe Biden told Netanyahu on a call Thursday that U.S. support for his war would depend on new steps to protect civilians, a shift in position for the U.S. 

Direct Iranian involvement in the war holds the potential for significant disruptions to global crude supplies, with the country consistently ranking among the world’s 10 largest producers. Meanwhile, Biden has sought to de-escalate and contain the conflict, pressing Netanyahu to implement an immediate ceasefire to improve the humanitarian situation in Gaza.

“Crude is pricing in additional geopolitical risk after a Biden and Netanyahu call ended with escalatory comments,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “The market is anticipating Iran’s response to Israel’s attack on Iran’s consulate in Syria and fearing another step-up in tensions.”

While it’s unlikely that crude supplies will be directly affected, “the fear of the unknown” is keeping traders on alert, she said.

The comments extended crude’s gain this year, which has been built on signs that production cuts by OPEC and its allies are tightening supplies while global demand remains robt. An OPEC+ committee didn’t recommend any changes to the group’s ongoing output cuts when it met on Wednesday, keeping 2 million barrels a day of output offline until the end of June. 

The heightening tensions in the Middle East gave futures a further push this week after Iran vowed revenge on Israel for an airstrike on its embassy in Syria that killed a top military commander. 

Prices:

• West Texas Intermediate for May delivery rose 1.4 per cent to settle at $86.59 a barrel.
• Brent for June settlement gained 1.5 per cent to settle at $90.65 a barrel.