ABC News is quoting a Pentagon official says that Israel is increasingly likely to attack Iran this year. Saber rattling by the U.S.? White-House approved leak to pave the way for an actual attack? Defense official speaking out of school to draw attention to impending war? Whatever the case, oil market participants are increasingly blaming oil's seemingly unstoppable ascent on worries about war between Israel/United States and Iran.

Ed Yardeni's note to clients this morning is typical.

Jay called me yesterday. We have been friends for many years. He is very plugged into what’s happening in the Middle East. He is very close to the top leadership of the opposition party in Israel. Jay expects that Israel will attack Iran with tactical support from the US before the end of the year. He says this is why the price of oil is over $140. Speculators may be behind the latest spike, but that’s because they are speculating that with the balance between supply and demand so tight, there is no room for any geopolitical flare-up let alone an attack on Iran. To buttress his thesis, he observes that the US isn’t even considering releasing some oil from the Strategic Petroleum Reserve in an effort to drop some barrels on the heads of the speculators. Bloomberg reports this morning that “Israel is increasingly likely to attack Iran's nuclear facilities this year, ABC News reported, citing an unidentified Pentagon official.” Furthermore, Admiral Mike Mullen, chairman of the US Joint Chiefs of Staff, was in Israel last weekend for meetings with Israeli military leaders, ABC said.