Oil prices jumped by up to 3% on Friday amid reports of a potential imminent attack on government targets in Israel by Iran, sending West Texas Intermediate (WTI) futures to October highs before settling at $85.66 per barrel. Brent crude also settled just above $90.45 per barrel as tensions between Israel and Iran continue to escalate.
Traders are on edge as they anticipate further escalation, leading to increased buying of options and upward pressure on futures prices. Analysts believe that if Iran’s production of 3 million barrels per day is disrupted, it could quickly tighten the supply/demand balance.
The surge in oil prices is also attributed to output cuts by the oil alliance OPEC+ and tensions from the Israel-Hamas conflict, as well as recent drone attacks on Russian refineries. Despite predictions of a possible rise to $100 per barrel for Brent, OPEC members are expected to increase production to prevent prices from skyrocketing.
Bank of America’s head of global commodities predicts oil prices will likely top out around $95 per barrel during the summer months. WTI is currently up more than 21% year-to-date, while Brent has gained roughly 20% during the same period.
The increase in energy costs has contributed to recent inflation in the US, with gasoline prices surging to $3.63 per gallon as of Wednesday. Stay updated on the latest business news by following Ines Ferre on Twitter at @ines_ferre for Yahoo Finance.
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