U.S. crude oil rallies as Pentagon sends more forces to Middle East

U.S. crude oil topped rallied Monday to top $80 per barrel as the Pentagon dispatched more forces to the Middle East in anticipation of an Iranian attack on Israel.

Defense Secretary Lloyd Austin ordered a carrier strike group, including F-35 warplanes, to accelerate its deployment to the region. Austin also ordered a guided-missile submarine to the Middle East.

Israel has put its military on high alert, a person familiar with the matter told The Wall Street Journal.

Here are Monday’s closing energy prices:

• West Texas Intermediate September contract: $80.06 per barrel, up $3.22, or 4.19%. Year to date, U.S. crude oil has gained 11.7%.
• Brent October contract: $82.30 per barrel, up $2.64, or 3.31%. Year to date, the global benchmark is ahead 6.8%.
• RBOB Gasoline September contract: $2.44 per barrel, up more than 5 cents, or 2.2%. Year to date, gasoline has risen about 16.2%.
• Natural Gas September contract: $2.18 per thousand cubic feet, up more than 4 cents, or 2.15%. Year to date, gas is down nearly 13%.

Israel has been preparing for strikes by Iran and the Hezbollah militia for nearly two weeks, after the assassination of a Hamas leader in Tehran. Israeli intelligence has assessed Iran is likely to respond directly to the killing within days, two sources with direct knowledge told Axios Sunday.

“We see allocations to oil and gold as the main means to add some protection to portfolios against a further escalation in geopolitical tensions,” UBS analysts told clients in a Monday research note.

U.S. crude oil is trading higher even as OPEC lowered its global demand growth forecast by 135,000 barrels per day, citing softening consumption in China.

“The oil markets reacted strongly to the increased geopolitical risk even as OPEC has shown some concern about its demand growth,” said Phil Flynn, senior market analyst at the Price Futures Group, though he said the market is still on track for a deficit as inventories fall.

U.S. crude oil finished last week more than 4% higher, snapping a 4-week decline, as the stock market recovered most of its losses from a flash sell-off caused by mounting fear of a recession and after the Bank of Japan lifted interest rates a fraction.