Brent oil was little changed near $90 a barrel, with Israel yet to launch its expected ground offensive into the Gaza Strip and the US ratcheting up efforts to prevent the crisis from becoming a full-blown, regional conflagration.
(Bloomberg) — Brent oil was little changed near $90 a barrel, with Israel yet to launch its expected ground offensive into the Gaza Strip and the US ratcheting up efforts to prevent the crisis from becoming a full-blown, regional conflagration.
Brent traded down 0.3%, after surging almost 6% on Friday to cap a major weekly gain. Over the weekend, US officials rushed to speak with Middle Eastern nations — including back-channel talks with Iran — to contain the conflict. Secretary of State Antony Blinken returns to Israel on Monday, and President Joe Biden is also considering a trip there in the coming days.
The risks of a price spike have sparked a surge in the options market in recent days, as traders seek to protect against the possibility of a further escalation. Bullish call options are trading at the biggest premium to bearish puts since April last year.
The global crude market has been transfixed by the confrontation following Hamas’ initial offensive against Israel amid concern that other states, especially Iran, may be drawn in. Any instability or escalation of fighting across the Middle East could jeopardize flows of crude from the region that accounts for about a third of worldwide supply, though so far there’s been little impact on supplies.
“Traders are really struggling to figure out how to trade this,” said Amrita Sen, co-founder and director of research at consultant Energy Aspects. “There’s no direct supply losses. Yet the region — we’ve got Iran, we’ve got the whole GCC, we’ve got Iraq — the geographical proximity is probably just too close for comfort,” she added, referring to Gulf nations.
Blinken will make an unscheduled return to Israel today following talks with Arab officials, including in OPEC+ leader Saudi Arabia. Earlier, Iran Foreign Minister Hossein Amirabdollahian warned that there was a risk of conflict spreading if Israel continued its offensive. Tehran is Hamas’s main backer, and also supports the Hezbollah group in southern Lebanon.
With thousands of Israeli troops massed near Gaza, the Biden administration has also beefed up the US military presence in the region. The USS Eisenhower carrier strike group has been dispatched to the eastern Mediterranean to join the USS Gerald Ford, sent shortly after Hamas’s attack.
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