Rep. Brian Mast (R-Florida) discusses Israel's response to Iran's missile attack on Kabuto: Coast to Coast.
crude oil price Prices soared last week as tensions in the Middle East escalate, with the market wary of the possibility of prices rising to $100 per barrel.
Prices rose about 9% last week, with crude oil options market traders showing record interest in November call options at $100 a barrel and December call options at $100, according to FactSet data. This was the highest level since September 20th. A call option gives a trader the right, but not the obligation, to buy an oil futures contract at that price.
This happened after Iran launched a giant ballistic missile. attack on israel Last week, the Israeli government vowed retaliation. This has raised concerns about a broader conflict in the Middle East involving Iran, which has supported proxies Hamas and Hezbollah in its war with Israel, and Yemen's Houthis, who have attacked ships in the Red Sea and Gulf of Aden.
“This is the biggest increase in oil price volatility in more than two years,” said Phil Flynn, senior account executive and market analyst at Price Futures Group and FOX Business contributor. “This market seems to be less susceptible to geopolitical risk factors, they seem to be ignoring them, and hedge funds have driven prices down many times. And now this is a wake-up call. Because it's becoming a reality.”
An Iranian ballistic missile attack on Israel is likely to prompt Israeli retaliation, which could focus on Iranian oil facilities. (Fateme Bahrami/Anadolu via Getty Images/Getty Images)
“This has the potential to actually disrupt society. supply of major oil producers; It will be difficult to replace. “And if for any reason a significant amount of Iranian oil exports were to be curtailed, the world would find itself in perhaps the tightest supply-demand situation in a generation.”
“That could lead to significant price increases, creating problems not only for the global economy but also for the Federal Reserve, which is trying to balance the economic impact of high oil prices and slow the economy.” new inflationary pressures It could be due to the rise in oil prices,” he added.
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Iranian-backed proxies, including Yemen's Houthis, Gaza's Hamas, and Lebanon's Hezbollah, have carried out numerous attacks against Israel. (Mohamed Huwais/AFP via Getty Images/Getty Images)
Brent crude oil prices rose more than 2.5% as of late Monday morning, topping $80 a barrel for the first time since Aug. 12, and up about 11.5% over the past five days.
Flynn said energy market traders are increasingly hedging against the prospect of sharp increases in oil prices due to rising geopolitical tensions. $100 per barrel.
“I think $100 per barrel is the worst-case scenario in the short term. But that doesn't mean there aren't many options to avoid that worst-case scenario. In fact, if you look at it, $100 per barrel is the worst-case scenario. “For options priced above $100, volume was three times normal for a number of reasons,” he said.
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Israel has been at war with the Iranian proxy group Hamas since the October 7, 2023 terrorist attack that killed more than 1,200 people. (Jack Guess/AFP via Getty Images/Getty Images)
“A lot of people who were bearish in this market are cash-strapped and are paying premiums for the worst-case scenario,” Flynn said.
“Also, some of the people using this product are saying, 'Hey, look at the world today, if this is really going to spread around the world.' middle east “If supply is disrupted, it could be $100 a barrel, so we have to prepare for the worst-case scenario,” Flynn said.
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“These options are very money-strapped, but if oil prices rise significantly, you can double or triple your investment in those situations. And if that doesn't happen , your risk is basically limited to the amount you paid for the option,” he said. “A few weeks ago, they were basically exiting these options, and now they're not as cheap as they were just a few weeks ago because of the increased volatility.”
