Oil Climbs as Investors Await Trump’s Plan on Iran Conflict
Oil climbed as traders waited to see whether President Donald Trump will plunge the US into the conflict between Israel and Iran.
Brent rose toward $78 a barrel, extending its uptick on Wednesday. Oil prices are markedly higher than where they were before the attacks began, with volatility spiking, options getting more bullish and premiums for nearby crude prices soaring over later ones.
Senior US officials are preparing for the possibility of a strike on Iran in the coming days, but the situation is still evolving and could change, according to people familiar with the matter. Trump concluded a meeting Wednesday with top advisers, but the White House offered few clues about the path forward.
Asked if he was moving closer to bombing Iran, Trump said “I may do it. I may not do it.” The Wall Street Journal reported that the president approved a military attack plan earlier in the week, but withheld the final authorization as he weighed whether Tehran would meet his demands.
Oil analysts and traders currently see about $8 of geopolitical risk premium priced into the market, and are bracing for that to rise further if the US joins in on the attacks.
The biggest concern for the oil market centers on the Strait of Hormuz, but so far there are no signs that Tehran is seeking to disrupt shipping through the narrow waterway at the entrance to the Persian Gulf. About a fifth of the world’s crude output passes through the strait.
Prices:
Brent for August settlement was up 1.2% at $77.64 as of 9:02 a.m. in New York, after falling as much as 1.3% earlier.
WTI for July delivery, which expires on Friday, gained 1.3% to $76.11 a barrel.
The more-active August contract rose 1.2% to $74.41 a barrel.
Source: Bloomberg
