Horizontal trend in oil

Oil fluctuated within a narrow range as risk aversion dominated broader markets and investors watched Israel’s response to Iran’s attack. U.S. crude was little changed above $85 a barrel as a stronger dollar weighed on commodities priced in hard currencies. Prices fluctuated between gains and losses of less than 1 percent throughout the session. Senior Israeli military officials said their country had no choice but to respond to Tehran’s weekend attack as Western and Arab countries tried to convince Prime Minister Benjamin Netanyahu that an aggressive response would harm Israel’s interests. Iran accounts for about a third of global crude supplies from the Middle East. Israeli officials’ comments on retaliation prompted a new round of bidding in the oil options market late on Monday. Bullish calls on global benchmark Brent crude were trading at the biggest premium to bearish puts since October, with the volume of contracts profiting from higher prices hitting a new record. Dennis Kissler, senior vice president at BOK Financial, said that unless the attacks escalate or “result in the destruction of oil-producing components, each attack will have less impact on prices. Still, the geopolitical risk premium of around $7 to $10 per barrel on crude will likely persist until there are signs of easing tensions.”