(Bloomberg) -- Brent crude soared above $80 a barrel — its highest price since August — as mounting tensions in the Middle East raised speculation that Israel may attack Iran’s oil infrastructure.

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The global benchmark’s 3.7% rally on Monday extends a surge from last week, which was driven by speculation about how Israel may respond to Iran’s missile attack on Tuesday. US President Joe Biden said Friday that he didn’t know when an Israeli response would come, and “I’d be thinking about other alternatives than striking oil fields.”

“The angst is building,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “The longer we wait, I think the fear is building, like when you are going up to the top of a roller coaster, anticipating the drop.”

US benchmark West Texas Intermediate crude also climbed 3.7%, topping $77 a barrel.

The Middle East remains on edge, with Hamas firing a barrage of rockets toward Tel Aviv and Israel sending troops back into northern Gaza over the weekend while also keeping up aerial attacks and limited ground maneuvers in Lebanon. Iran’s oil output has returned to almost full capacity and could be vulnerable as tensions escalate.

Brent posted its biggest weekly gain since January 2023 last week on the heightened tensions in a region that accounts for about a third of global crude supply. The rally marks a stark reversal in mood after prices slumped in the third quarter on concerns about the supply and demand outlook for next year. Goldman Sachs Group Inc. analysts including Daan Struyven predicted in a note that Brent could surge to the $90s if Iran’s oil supply is disrupted.

Separately, traders also cited a note from Goldman Sachs that estimated algorithm-driven traders known as commodity trading advisers could unleash as much as $40 billion of buying in Brent and WTI combined if prices rise significantly. Those funds, along with other speculators, had amassed a record bearish stance before the latest tensions surfaced and have been quickly unwinding those bets over the past week.

Global markets have also been re-pricing the outlook for Federal Reserve interest rate cuts after a blowout jobs report on Friday. Traders no longer see another half-point reduction in rates this year amid expectations that the US economy will continue growing and reignite inflation, leaving little room to cut.