Oil prices climbed on Friday, marking their biggest weekly gains in over a year amid growing concerns of a wider conflict in the Middle East. Brent crude futures rose 0.6% to $78.05 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.9% to settle at $74.38 per barrel. The weekly gains for Brent were over 8%, while WTI surged 9.1%, reflecting the highest increases since January and March 2023, respectively.
These price hikes were driven by escalating tensions after Iran’s missile attack on Israel, in retaliation for Israel’s assassination of a Hezbollah leader. Fears of broader conflict and potential disruptions to global oil supplies have caused market jitters, although President Joe Biden’s suggestion that Israel consider alternatives to striking Iranian oil fields tempered the upward movement. Biden’s remarks followed discussions between the U.S. and Israel about possible responses to Iran’s actions, including targeting its energy infrastructure. Oil analysts noted that low global inventories, the lowest on record at 4.4 billion barrels, suggest that prices could remain elevated if the conflict continues. JPMorgan analysts also suggested that striking Iranian oil facilities may not be Israel’s preferred strategy, but supply disruptions could still cause prices to jump by $3 to $5 per barrel. Meanwhile, Iran’s Revolutionary Guards have warned that they would target Israeli energy installations if Iran’s facilities are attacked. Despite the heightened tensions, OPEC+ members, including Iran, have spare capacity that could help balance global supply if Iranian output is affected. Additionally, supply fears eased somewhat with Libya reopening its oilfields and export terminals after resolving internal disputes.