Oil rose 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 per cent to top US$92 a barrel — a level last reached during the early days of the war —  before paring gains to settle above $90 a barrel. U.S. benchmark West Texas Intermediate climbed as much as 3.1 per cent before its advance faded. 

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 U.S. has moved additional military assets into the region.

“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.”

WTI has surged about 19 per cent 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.


  • West Texas Intermediate for May delivery rose 64 cents to settle at $85.66 a barrel.
  • Brent for June settlement climbed 71 cents to settle at $90.45.