Oil prices are set to rise as market braces for Israel response to Iran's missile and drone barrage

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An anti-missile system operates after Iran launched drones and missiles towards Israel, as seen from Ashkelon, Israel April 14, 2024. (View a special livestream of CNBC's coverage of the conflict and market impact at 6 p.m. ET Sunday here.) Crude oil futures were set to open higher Sunday after Iran launched an air assault against Israel with a barrage of missiles and drones, raising fears that the Middle East is spiraling toward a regional war that could disrupt oil supplies. The West Texas Intermediate contract for May delivery hit a session high of $87.67 on Friday, while June Brent futures rallied to $92.18. U.S. crude closed at $85.66 a barrel Friday, while the global benchmark settled at $90.45. WTI futures began the year around $71 a barrel. Iran launched more than 300 drones and missiles against military targets in Israel on Saturday in an attack that President Joe Biden described as "unprecedented." The U.S. intervened to directly help Israel shoot down nearly all of the incoming munitions, Biden said in a statement Saturday. The crude oil market is now bracing for the Netanyahu government's response to the attack and waiting to see whether this marks the start of a direct war between Israel and Iran, according to Jorge Leon, senior vice president at Rystad Energy. "In a worst-case scenario, a forceful retaliation by Israel could trigger a spiral of escalation, potentially leading to an unprecedented regional conflict," Leon said Sunday in a note. "Under such circumstances, geopolitical premiums would increase significantly." The air assault was the first time Iran has directly attacked Israeli territory, senior U.S. military officials told reporters in a call Sunday. The attack was launched from locations in Iran, Iraq, Syria and Yemen, the officials said. More than 100 ballistic missiles were fired at Israel as well as land attack cruise missiles and drones, a senior administration official said. The attack was retaliation for an Israeli strike against the Islamic Republic's diplomatic facilities in Damascus, Syria earlier this month that killed seven Iranian military officials including a senior commander.