- Concerns grow that US could be pulled into wider regional war
- Brent jumps above $93 a barrel to head for second weekly rise
Oil advanced as geopolitical tensions ratcheted higher in the Middle East, with prices poised for a second straight weekly gain.
Global benchmark Brent rose above $93 a barrel. The US is seeing stepped-up drone attacks in Iraq and Syria, the Pentagon said, while an American destroyer intercepted cruise missiles fired toward Israel by Houthi rebels in Yemen. In addition, Israel is expected to launch a ground invasion of Gaza after massing troops on the border.
It remains to be seen if the market will repeat the rally from last Friday when crude rose 5.7% as traders in part covered bearish positions ahead of the weekend.
Prices have been pushed higher by the crisis, which was ignited by the Oct. 7 attack on Israel by Hamas, designated a terrorist group by the US and the European Union. There are concerns that the conflict will spread to other states including Iran, and could even potentially draw in the US, which has beefed up its local military presence substantially.
“Underlying fundamentals are playing second fiddle to the tragic events in Israel and Gaza,” said Tamas Varga, an analyst at brokerage PVM.
The war has also led to a frenzy of activity in the options market as traders try to price the risk of further surges in crude. Trading of bullish calls has outpaced that of bearish puts every day for almost a month.
Away from the conflict, the US Energy Department said on Thursday that it aimed to buy as much as 6 million barrels for the Strategic Petroleum Reserve, as it continues to replenish the stockpile after a record withdrawal.
©Bloomberg