(Bloomberg) — Oil held steady as tensions in the Middle East persisted, with traders waiting to see how Israel would respond to Iran’s weekend attack.
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Brent crude traded near $90 a barrel after ending little changed on Tuesday, while West Texas Intermediate was above $85. Israel has vowed to respond against Tehran for the unprecedented drone and missile attack at the weekend, although the US and Europe have urged restraint.
Crude has surged this year as geopolitical risks in the Middle East and Russia, as well as OPEC+ output cuts, combined to push prices higher. Fresh comments on Tuesday from Federal Reserve Chair Jerome Powell, however, signaled that policymakers will wait longer than previously anticipated to cut US interest rates. That’s likely to be a headwind for wider energy demand.
While headline price movements are relatively muted, oil options markets are flashing warning signs. Bullish call options are trading near the widest premium to opposing puts since October — when the Israel-Hamas war began — as trading volumes of calls soar. Traders piled into over 3 million barrels worth of options contracts in a bet that US oil prices would spike to $250 a barrel by June.
Stockpiles were also in focus after the American Petroleum Institute reported a rise of more than 4 million barrels in nationwide US inventories, although gasoline levels declined, according to people familiar with the figures. Official data are due later Wednesday.
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