Oil rallies on report Iran is planning to attack Israel

November 01, 2024 (MLN): Oil rallied after a report that Iran could be preparing to attack Israel from Iraqi territory in the coming days.

Brent crude rose 1.9% to $74.18 a barrel on Friday.

While West Texas Intermediate crude (WTI) jumped toward $70.67 per barrel, up by 2.0% on the day.

Iran is planning a strike through militias it backs in Iraq, which is expected to be carried out with drones and ballistic missiles, Bloomberg reported Axios as saying.

Oil tumbled at the start of the week after a limited Israeli attack on Iran in response to an October 01 missile barrage, which led to a war premium quickly unwinding and focus shifting to weak fundamentals.

However, Standard Chartered Plc warned that the market had “relaxed too quickly.”

Developments during the week were pointing to a potential easing of hostilities in the Middle East, with Israel also considering a US-led proposal to end the conflict in Lebanon.

Still, the Israeli military said the nation would hit back “very hard” should Iran attack again.

“The market can’t ignore signs of resurgent Mideast tensions, but it is amply clear by now that neither Israel nor Iran would willingly do anything that might risk a wider war,” said Vandana Hari, founder of Vanda Insights in Singapore.

The oil market has a number of key events on the horizon that could impact prices, from the US election and a meeting of China’s top legislative body next week, to a looming decision from OPEC+ to start gradually reviving production from December.

China’s manufacturing activity, meanwhile, unexpectedly picked up in October despite a weeklong holiday, according to a private survey.

The reading offered a sign of stabilization after Beijing unleashed stimulus to shore up the economy. In another sign of improved confidence, residential property sales rose last month, the first year-on-year increase of 2024.

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