Oil held steady near $91 a barrel as traders watched for an expected ground offensive by Israel into the Gaza Strip and the US stepped up diplomatic efforts to stop the conflict spreading more widely.
(Bloomberg) — Oil held steady near $91 a barrel as traders watched for an expected ground offensive by Israel into the Gaza Strip and the US stepped up diplomatic efforts to stop the conflict spreading more widely.
Brent surged almost 6% Friday to cap a large weekly gain, but Monday’s move was much more muted. US officials have rushed to speak with Middle Eastern nations — including Iran — to contain the fighting. Yet Iran’s foreign minister has said an expansion of the war is “approaching the inevitable stage.”
That danger has sparked a race to hedge against a price spike in the options market, with bullish calls trading at the biggest premium to bearish puts since April last year.
The global crude market has been transfixed by the crisis in the Middle East on concern that other states, especially Hamas-backer Iran, may be drawn in. Any wider escalation may jeopardize crude exports from a region that accounts for about a third of global supply, though so far there’s been little impact on flows.
“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 geographical proximity to other regional powers such as Iran is “probably just too close for comfort.”
US Secretary of State Antony Blinken made an unscheduled return to Israel Monday following talks with Arab officials, including in Saudi Arabia.
With thousands of Israeli troops massed near Gaza, the Biden administration also has beefed up the US military presence in the region.
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