(Bloomberg) --Brent crude soared to $80 a barrel — its highest price since August — as mounting tensions in the Middle East raised speculation that Israel may attack Iran's oil infrastructure.
The global benchmark is extending a surge from last week, which was driven by speculation about how Israel may respond to Iran's missile attack on Tuesday. US President Joe Biden said Friday that he didn't know when an Israeli response would come, and “I'd be thinking about other alternatives than striking oil fields.”
Brent posted its biggest weekly gain since January 2023 last week on the heightened tensions in a region that accounts for about a third of global crude supply. The rally marks a stark reversal in mood after prices slumped in the third quarter on concerns about the supply and demand outlook for next year.
Global markets have also been re-pricing the outlook for Federal Reserve interest rate cuts after a blowout jobs report on Friday. Traders no longer see another half-point reduction in rates this year amid expectations that the US economy will continue growing and reignite inflation, leaving little room to cut.
In a sign of the turnaround, trading of bullish Brent call options hit a record on Wednesday, led by contracts at $100 a barrel, as traders protect against the risk of a spike.
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