U.S. crude oil gains as Israel reportedly prepares for attack by Iran this weekend

• West Texas Intermediate futures hit a session high of $87.67 a barrel on multiple media reports that Israel is preparing for an imminent attack by Iran.
• The U.S. embassy in Jerusalem has restricted government employees and their families from personal travel outside Tel Aviv, Jerusalem and Beersheba “out of an abundance of caution.”
• Brent crude oil futures could spike to $100 a barrel if Iran directly attacks Israel, according to Bob McNally, president of Rapidan Energy.

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.

Crude oil futures rose Friday on reports that Israel is 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 hit a session high of $87.67, while June Brent futures rallied to $92.18. Exxon Mobil stock hit an all-time intraday high of $123.74 as the oil rally lifted the energy sector.

U.S. crude ultimately gained 64 cents, or 0.75%, at settle at $85.66 a barrel, while the global benchmark settled at $90.45, up 0.79% or 71 cents.

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.

People familiar with Western intelligence assessments told Bloomberg News that an attack by Iran, or its proxies, with drones and missiles against Israel could come as soon as the next 48 hours.

The U.S. embassy in Jerusalem on Thursday restricted government employees and their families from personal travel outside Tel Aviv, Jerusalem and Beersheba “out of an abundance of caution” until further notice.

Iran’s Supreme Leader Ayatollah Ali Khamenei has vowed to punish Israel for a missile attack an Islamic Republic diplomatic building in Damascus, Syria, last week that killed seven Iranian military officials.

Oil prices rallied after that attack, though futures are down slightly this week as inflation data and U.S. crude stockpiles have weighed on the market.

Israel has warned Iran it will strike back against the Islamic Republic if Tehran attacks Israel.

“If Iran attacks from its territory, Israel will react and attack in Iran,” Foreign Minister Israel Katz said on the social media platform X on Wednesday, tagging Khamenei.

Brent crude oil futures could spike to $100 a barrel if Iran directly attacks Israel, according to 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.