U.S. crude oil cracks $85 to hit highest level since October as geopolitical tensions mount

Oil
prices
on
Tuesday
rose
to
their
highest
level
since
October
as
investors
closely
monitored
fresh
supply
threats
amid
an
escalating
conflict
in
the
Middle
East
and
a

Ukrainian
drone
strike
on
a
major
Russian
oil
refinery.

The
U.S.


West
Texas
Intermediate
contract
for
May
delivery
gained
$1.44,
or
1.72%,
to
settle
at
$85.15
a
barrel.
The


Brent
contract
for
June
delivery
added
$1.53,
or
1.75%,
to
$88.94
a
barrel.

Brent
futures
have
largely
been
trading
in
a
narrow
interval
between
$75
and
$85
per
barrel
since
the
start
of
the
year,
but
heightened
geopolitical
risk
and

robust
economic
data
appear
to
have
prompted
a
move
higher.

“The
new
week,
the
new
month
and
the
new
quarter
was
greeted
with
escalating
tension
in
the
Middle
East
with
indirect
Iranian
involvement,”
Tamas
Varga,
an
analyst
at
oil
broker
PVM,
said
in
a
research
note
published
Tuesday.

OPEC
member
Iran
has

blamed
Israel
for
a
deadly
air
strike
Monday
on
its
consulate
in
the
Syrian
capital
of
Damascus
that

reportedly
killed
seven
of
its
officers.

Tehran
on
Tuesday
pledged
to
take
revenge
for
the
attack,
which
was
seen
as
a
major
escalation
in
the
Israel-Hamas
war.
Israel
has
not
declared
responsibility
and
a
government
spokesperson
said
they
would
not
comment
on
foreign
media
reports,
according
to
Sky
News.

PVM’s
Varga
warned
that
the
potential
for
direct
Iranian
involvement
in
the
Israel-Hamas
war
could
spark
a “region-wide
conflict
with
plausible
impact
on
oil
supply.”

Ukraine
on
Tuesday
struck
one
of
Russia’s
largest
oil
refineries
with
a
drone
attack
on
the
highly
industrialized
Tatarstan
region
southeast
of
Moscow,
around
1,300
kilometers,
or
800
miles,
from
the
front
lines
of
the
conflict.

Tatarstan’s
head
Rustam
Minnikhanov
said
in
a

Google-translated
post
on
Telegram
that
industrial
locations
had
been
targeted
by
drones
in
the
towns
of
Nizhnekamsk
and
Yelabuga.

“There
is
no
serious
damage,
the
technological
process
of
the
enterprises
is
not
disrupted,”
Minnikhanov
said.

Russia,
an
influential
member
of
the
Organization
of
the
Petroleum
Exporting
Countries
and
its
allies,
collectively
known
as
OPEC+,
has
been
hit
by

a
flurry
of
Ukrainian
drone
strikes
in
recent
months
and
has
sought
to

escalate
its
own
attacks
on
Ukraine’s
energy
infrastructure.

—
CNBC’s
Elliot
Smith
and
Spencer
Kimball
contributed
to
this
report.