Oil traders are on the defensive against the risk of an escalating war between Israel and the opposition

Oil prices posted their highest increase in a month after Iran said it could open a new front in the conflict between the Israeli occupation and Palestinian resistance. Brent crude futures rose $4.89, or 5.7%, to $90.89 a barrel, and US West Texas Intermediate crude rose above $87 a barrel, gaining $5 in a week since the war broke out.

A more drastic escalation would push Israel toward direct conflict with Iran. In this scenario, Bloomberg Economics estimates that oil prices could rise to $150 per barrel and global economic growth would slow to 1.7%.

Oil prices rose in the first trading session last Monday after the start of the “al-Aqsa flood” operation launched by Palestinian resistance against occupied military bases and Israeli settlements bordering the Gaza Strip, but futures contracts lost some of their gains. Over the next few sessions, after investors dismissed any risk, directly on oil supplies from the Middle East.

Prices rose again in the last session of the week on Friday after Iranian Foreign Minister Hossein Amir Abdollahian warned that the occupation and blockade imposed on Gaza would open a new front in the conflict between the Israeli occupation and the resistance.

The Israeli military is expected to launch a ground offensive soon to force the evacuation of northern Gaza. Options markets, which saw huge volatility last week, saw another move in favor of buying, betting on price rises, an unusual shift that shows investors are hedging against the risk of further price rises.

Investors are trying to factor in the possibility of Iran joining the war and any risk of disruption to broader flows. Although supply has not been significantly affected so far, traders said Friday’s rise indicated investors were abandoning bearish bets ahead of the weekend.

In turn, OANDA’s market analyst Edward Moya, according to the American Bloomberg agency, said, “The oil market, which is currently suffering from a supply shortage, now has to deal with more geopolitical instability, and crude oil prices are increasing. Energy Investors said “we strongly believe we will see some conflict-related supply disruptions in the future.”