U.S. crude oil breaks above $87 as Israel reportedly preparing for Iran attack this weekend

File photo of Israeli F-16 fighter jets performing during an air show over the beach in the Israeli coastal city of Tel Aviv on May 5, 2022.
Jack Guez | Afp | Getty Images

Crude oil futures rose Friday as Israel is reportedly preparing for a direct attack by Iran this weekend, in what would be the biggest escalation of Middle East tensions since the start of the Israel-Hamas war last October.

The West Texas Intermediate contract for May delivery gained $1.14, or 1.34%, to $86.15 a barrel. June Brent futures added $1.04, or 1.16%, to $90.79 a barrel.

Israel is preparing for a direct attack by Iran on southern or northern Israel as soon as Friday or Saturday, a person familiar with the matter told The Wall Street Journal. A person briefed by Iran’s leadership told the Journal that no final decision has been made, though plans for a strike are under discussion.

Iran’s Supreme Leader Ayatollah Ali Khamenei has vowed to punish Israel for a missile attack on the Islamic Republic’s consulate in Damascus, Syria last week that killed seven Iranian military officials. Oil prices rallied after the consulate attack, though futures are down slightly this week as inflation data and U.S. crude stockpiles have weighed on the market.

Bloomberg News reported earlier this week the U.S .and its allies see an attack by Iran or its proxies on military and government targets in Israel as “imminent.”

Brent crude oil futures could spike to $100 a barrel if Iran directly attacks Israel, according Bob McNally, president of Rapidan Energy and a former senior energy official in the Bush administration. If the escalation leads to a disruption in the Strait of Hormuz, a critical trade route for oil, prices could surge to $120 or $130 a barrel, McNally told CNBC.

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