Brent tops $112 on reports of Iran strike plans and a deadly attack on a Saudi Aramco field, while gold slips below $4,100

Oil has a new reason to climb. Brent crude jumped about 3% overnight to above $112 a barrel, after a report that the U.S. and Israel are preparing for renewed strikes on Iran and a deadly drone attack on one of Saudi Arabia's oil fields. Gold moved the other way, slipping below $4,100 an ounce, as traders worried that higher energy prices will keep inflation, and interest rates, elevated.

Brent futures were up 3.1% at $112.20 a barrel at 4:12 a.m. ET, according to CNBC, and a later CNBC report put Brent at $112.44. West Texas Intermediate, the U.S. benchmark, was up about 2.8% at roughly $99.86 to $99.96. Earlier in the night TipRanks had Brent at $111.17 and Cannon Trading described it as holding above $111, so the move built steadily through the Asian and European sessions.

Three headlines behind the move

The biggest was a New York Times report, citing unnamed U.S. officials, that the U.S. and Israeli militaries have drawn up specific plans for renewed strikes on Iran after the U.S. midterm elections next month. Planning for a "short but intensive" operation is progressing, the Times said, according to CNBC. Newsquawk reported that the plans include energy infrastructure among the targets.

The second was in Saudi Arabia itself. A drone attack on Saudi Aramco's Shaybah oil field killed two people on Wednesday, according to Newsquawk and Anadolu Agency, although Newsquawk said the Saudi energy ministry reported no impact on operations.

The third was a security warning. The U.S. ordered non-emergency government employees and their families to leave Saudi Arabia as Houthi attacks against the country increase, according to CNBC and Cannon Trading.

Why the risk premium can come and go

Newsquawk noted a pattern from past Gulf flare-ups: strikes on military targets and missile launchers have tended to fade from the oil price within a few sessions, while lasting damage to export facilities or shipping has repriced crude for longer. The Shaybah attack, with no reported operational impact, sits on the first side of that line for now. That is why traders watch whether physical supply is actually disrupted, not only whether headlines escalate.

U.S. crude also needs a note on contract months. The November WTI contract expired earlier this week, so quotes near $99 to $100 refer to December delivery, which has traded below the expired November contract.

Gold and silver slip

Precious metals did not behave like a classic safe haven this time. Gold was at $4,088.95 an ounce, down 1.26%, as of 0800 GMT, according to Anadolu Agency, and Cannon Trading also put the drop at about 1%. Silver fell about 3.6% to $55.89, per Anadolu, while Cannon Trading had the decline nearer 2.4%. Anadolu said gold was down 4.62% over the past month and silver down 13.11%.

The reason is rates. Higher oil prices feed inflation, and higher inflation makes it harder for the Federal Reserve to ease. The Fed is widely expected to leave rates unchanged at its Oct. 27-28 meeting, but markets continue to price a possible increase in December as energy-driven inflation persists, according to Anadolu Agency and Trading Economics. Gold pays no interest, so the prospect of higher rates for longer tends to weigh on it.

Bonds took the other side

Treasuries rallied anyway. The 10-year yield fell more than 7 basis points to about 5.07%, according to CNBC, and Trading Economics put it near 5.08%, as a global selloff in technology stocks drew money into government bonds. The 2-year yield fell about 5 basis points to roughly 4.77%, CNBC reported.

Why it matters

Oil near $112 filters into gasoline, airline fares and shipping costs, and it sits at the center of the Fed's inflation problem a week before its next decision. American Airlines reports before the bell today, so investors will hear directly how one fuel-heavy business is handling the price. For now the move rests on reports and plans rather than confirmed supply losses, which is why the price can swing sharply on the next headline.