Oil prices rose by almost 2% today. The rise was caused by news that Iran is planning an attack on Israel in the coming days, Commerzbank’s commodity analyst Carsten Fritsch notes.

Pricing out of the geopolitical risk premium seems premature

“Oil prices rose by around 2 per cent today, triggered by news that Iran is planning an attack on Israel in the coming days, possibly even before the US elections, according to the news portal Axios, which cited two sources close to Israeli intelligence. The attack is to be carried out using drones and missiles launched from Iraq.”

“At the beginning of the week, oil prices had fallen significantly after the Israeli retaliation last weekend spared Iran's oil and nuclear facilities, leading to the expectation that no further escalation would occur. This hope now appears to have been called into question, suggesting that the pricing out of the geopolitical risk premium in the oil market may have been premature.”