Brent futures were up $1.40, or 1.61%, at $88.51 a barrel
Oil prices climbed on Friday as reports that Israel had attacked Iran roiled markets and triggered concerns that Middle East oil supply could be disrupted.
The benchmark contracts soared more than $3 before easing marginally. At 0615 GMT, Brent futures were up $1.40, or 1.61%, at $88.51 a barrel. The most active U.S. West Texas Intermediate (WTI) contract jumped $1.38, or 1.68%, to $83.48 per barrel.
Israel launched an attack on Iranian soil on Friday, sources told Reuters, the latest exchange between the two nations that threatens to drag the region deeper into conflict.
Iranian media reported explosions, but an Iranian official told Reuters those were caused by air defence systems.
Growing geopolitical risk premiums translate to a risk-off environment at this juncture with a heightened risk of oil supply disruption at least in the short-term, according to Kelvin Wong, an analyst at OANDA in Singapore.
Further escalation (suggests) that the tit-for-tat retaliation between both sides will drag for longer, said Jun Rong Yeap, a market strategist at IG in Singapore.
An Iranian counterattack poses “significant risks to the widening of the conflict to a regional one and could potentially put some oil supplies at risk. Prices of oil could stay supported in the meantime as tensions will continue to heat up,” Yeap added.
Last weekend Iran launched an attack in a retaliatory strike after an Israeli strike on its embassy in Syria.
Investors have been closely watching Israel’s reaction to the April 13 Iranian attacks. The geopolitical risk premium in oil prices had been unwinding this week on the perception that any Israeli retaliation to Iran’s attack would be moderated by international pressure.
