Crude oil futures surged on reports that Israel is bracing for a potential direct attack by Iran, marking the most significant escalation of Middle East tensions since the Israel-Hamas conflict last October. The West Texas Intermediate contract for May delivery reached a session high of $87.67, while June Brent futures climbed to $92.18, leading Exxon Mobil stock to hit an all-time intraday high of $123.74 as the oil rally fueled the energy sector. US crude settled at $85.66 a barrel, up 0.75%, while the global benchmark settled at $90.45, gaining 0.79% or 71 cents.
According to insiders speaking to The Wall Street Journal, Israel is on high alert for a potential direct assault by Iran in southern or northern Israel over the weekend, while another source briefed by Iran’s leadership noted that plans for a strike are under discussion, with no final decision made yet. Western intelligence assessments, as reported by Bloomberg News, indicate that an attack by Iran or its proxies, involving drones and missiles, could be imminent within the next 48 hours. In response to the escalating tensions, the US embassy in Jerusalem issued a travel advisory for government employees and their families restricting personal travel outside certain areas as a precautionary measure.
Supreme Leader Ayatollah Ali Khamenei of Iran has vowed retaliation against Israel following a missile attack on an Islamic Republic diplomatic building in Damascus, Syria, which resulted in the deaths of seven Iranian military officials. While oil prices initially surged after the attack, they have dipped slightly due to factors such as inflation data and US crude stockpiles. In the event of Iran directly targeting Israel, Brent crude oil futures could potentially spike to $100 a barrel, as predicted by Bob McNally, president of Rapidan Energy and a former senior energy official in the Bush administration. Additionally, any disruption in the Strait of Hormuz, a crucial oil trade route, could further drive prices up to $120 or $130 a barrel.
Israeli Foreign Minister Israel Katz has issued a warning to Iran, stating that if Tehran launches an attack from its territory, Israel will respond in kind by attacking Iran. The threat of further military escalation in the region has led to uncertainty in the oil markets, with the potential for increased geopolitical tensions to impact global oil prices. As the situation unfolds and tensions continue to rise between Israel and Iran, the energy sector remains on high alert for any developments that could further disrupt global oil markets. The possibility of direct conflict between the two nations raises concerns about the stability of the Middle East and its implications for the broader oil market, with potential price spikes and supply disruptions looming on the horizon.
