(Bloomberg) — Oil held the first gain in three sessions as traders watched for a potential attack on Israel by Iran or its proxies, which could spark a significant escalation of hostilities in the Middle East.
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Brent futures traded above $90 after closing 1.1% higher on Wednesday, while West Texas Intermediate was near $86. The US and its allies believe a strike is imminent, according to people familiar, which would follow a threat by Iran to hit Israel for an attack on a diplomatic compound in Syria last week.
Oil is up around 17% this year as geopolitical tensions combine with OPEC+ supply cuts to drive prices higher. Still, there are headwinds in the form of swelling US crude stockpiles — now at the highest since July — and a hot US inflation print, which may delay rate cuts from the Federal Reserve.
Many of the world’s top traders and Wall Street banks are shifting toward a bullish tone on prices, with some seeing a possible return to $100 for the global benchmark. However, Macquarie Group said Brent will enter a bear market in the second half, with recent gains unlikely to hold if geopolitical events don’t lead to actual supply disruptions.
On Wednesday, Iran’s Supreme Leader Ayatollah Ali Khamenei repeated a vow to retaliate against Israel for the Damascus strike. Even so, the head of the naval forces said recently that the country won’t block the Strait of Hormuz, a major trade route for Middle Eastern oil.
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