- Oil prices soared on Friday amid reports of Israel readying for an attack by Iran as soon as this weekend.
- Israeli PM Benjamin Netanyahu pledged direct retaliation to any aggression.
- An attack would mark an extreme escalation of conflict in the Middle East that's been ongoing for six months.
Oil prices shot up on Friday amid reports Israel is gearing up for an attack by Iran as early as this weekend, an event that would mark the most significant escalation in Middle East tensions since last October's Israel-Hamas conflict.
West Texas Intermediate crude oil rose as much as 2% before paring some gains. WTI hovered around $85.88 at 1:00 p.m. ET. Brent surged past $90 a barrel, hitting $91.98.
The sudden spike in crude prices came after reports that Israel was bracing for a potential direct attack from Iran on southern or northern territory as soon as Friday or Saturday, though sources close to Iranian leaders told The Wall Street Journal that no final decision had been reached yet.
Oil has been on the rise in recent weeks as economic activity in the US remains high and conflict simmers in the Middle East, with some commentators eyeing a rapid ascent to $100 a barrel if war spills out into the greater region.
"If push comes to shove between Israel and Iran, $100 or more is likely," Market veteran Ed Yardeni commented on Friday.
Iran's potential method of attack on Israel is uncertain, though Israeli Prime Minister Benjamin Netanyahu vowed to respond directly to any aggression.
Earlier this week, US intelligence reports indicated an imminent threat of an attack on Israeli assets by Iran or its proxies, which was confirmed by a knowledgeable US official, specifying that the potential strike could target "possibly on Israeli soil" rather than Israeli interests elsewhere.
The killing of seven Iranian military personnel by an Israeli airstrike on an Iranian diplomatic compound in Syria this week signaled a notable intensification of hostilities. Iran's Supreme Leader, Ayatollah Ali Khamenei, has pledged to retaliate against Israel.
Broader financial markets are on edge over the possibility that the conflict intensifies. Stocks were down on Friday, with the S&P 500 shedding 1.5% by midday and the Dow Jones Industrial Average tumbling nearly 500 points.
"The financial markets are bracing for this calamitous scenario. The S&P 500 has had a nearly vertical ascent of 27.6% from 4117.37 on October 27, 2023 to 5254.35 on March 29. That might be it for a while, especially if push does come to shove between Israel and Iran," Yardeni wrote. "For now, we are sticking with our yearend target of 5400, but we can't rule out a test of the 200-dma under the circumstances."
The unease pushed up the price of safe-haven assets, with gold reaching another record high Friday and US government bond yields tumbling.