Oil Jumps on Possibility of Israeli Attack on Iran

Crude oil prices rose sharply earlier today following reports on Tuesday that Israel had plans to attack Iranian nuclear facilities.At the time of writing, Brent crude was trading at $66.37 per barrel, with West Texas Intermediate at $62.56 per barrel, after CNN reported late on Tuesday that new intelligence obtained by the U.S. suggested the Israeli government was considering strikes on Iranian nuclear sites.“Such a strike would be a brazen break with President Donald Trump,” CNN reported, citing U.S. officials. The news comes amid negotiations on a new nuclear deal between Washington and Tehran that President Trump appears eager to seal and Iran is not opposed to the idea, either.Yet a direct strike on Iran from Israel will wreak havoc on these negotiations and increase the risk of a broader Middle Eastern conflict yet again. This would in turn threaten to affect oil supply, triggering higher benchmark prices.The threat of an escalation between Israel and Iran offset bearish news for oil such as the weekly inventory report of the American Petroleum Institute, which showed a build of 2.5 million barrels, and the news that Kazakhstan once again overproduced despite its OPEC+ quota. In May, the Central Asian country booked a 2% increase in oil output despite pressure from Saudi Arabia to fall in line.Meanwhile, there appears to be disagreement in U.S. government about ow likely it was for Israel to follow through with its plans for a direct strike on Iran. Per the CNN report, officials believe the final decision would depend on the deal that Trump strikes with the Iranians, if he does succeed in striking that deal.Even so, “the chance of an Israeli strike on an Iranian nuclear facility has gone up significantly in recent months,” CNN reported, quoting an unnamed official, who also added that “And the prospect of a Trump-negotiated US-Iran deal that doesn’t remove all of Iran’s uranium makes the chance of a strike more likely.”By Irina Slav for Oilprice.com