Oil prices post biggest weekly jump since early 2023 on fears of Israel striking Iran's oil facilities

Live updates: Follow the latest on Israel-Gaza Oil prices posted their biggest weekly jump since the first quarter of 2023 amid escalating geopolitical tension , with Israel's potential retaliatory strike on the Iran's oil infrastructure prompting worries over supply disruption. Brent, the benchmark for two thirds of the world's oil , settled 0.55 per cent higher at $78.05 a barrel. West Texas Intermediate, the gauge that tracks US crude, closed up 0.91 per cent at $74.38 a barrel. Both benchmarks briefly retreated in early Friday trade. For the week, they leapt 8.9 per cent and 9.1 per cent, respectively. Brent and WTI shot up by as much as 4 per cent and 5.7 per cent, respectively, on Thursday, after US President Joe Biden said the country was discussing the possibility that Israel will hit Iranian oil facilities in retaliation for Tehran's ballistic missile attack. The White House has given no further details but the President said he did not expect Israel to retaliate immediately. On Friday, Mr Biden said the US would not support an Israeli strike on Iran's nuclear infrastructure. Oil prices also rose sharply on Tuesday after Iran's late-night strike on Israel, which drew a vow of swift retaliation from Prime Minister Benjamin Netanyahu. Israel's conflicts with its Middle East neighbours have been expanding: its war in Gaza has been going on for almost a year and it also launched a ground invasion against Hezbollah in southern Lebanon. Analysts are particularly concerned on how Israel might respond to Tehran's attacks. "Global headlines were shaken ... and that Joe Biden may let Israel do it. It’s a complex chain of events, but the possibility of Israel targeting Iran’s oil infrastructure is definitely raising eyebrows around the world and giving a decent energy boost to oil prices," Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, wrote in a note on Friday. She said crude's upside potential is "clearly present" due to the rising tension. "But it’s important to keep in mind that the gains that are made on the back of geopolitical tensions will – sooner rather than later – be given back. Tactical longs will benefit from the rising tensions as long as they last, and until the focus will return to the market fundamentals of ample global supply and prospects of slowing global demand," she added. Iran, which produces more than 3 million barrels a day of oil, is an Opec member and is vital to maintain balance in the global energy market. The ample supply of Opec+, however, has managed to keep a lid on oil prices, which remain about 15 per cent lower than their 2024 peak in April. Opec+ held a panel meeting on Wednesday when the group did not make any changes to its production policy. Last month, the producers' alliance extended voluntary oil output cuts of 2.2 million barrels per day until the end of November amid a drop in crude prices on concerns of slumping demand. Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman will pause scheduled increases of 180,000 bpd in October and November. "The potential for supply disruptions – particularly, but not exclusively from Iran – increases as the fighting intensifies. But Opec+ still sits on unusually ample spare capacity, which is the result of successive production cuts over the past two years," said Claudio Galimberti, chief economist of Rystad Energy. "This spare capacity is for now preventing runaway prices amid one of the deepest and most pervasive crises in the Middle East in the past four decades.” The Opec+ alliance is doing a “noble job” of balancing the oil market, even though the group does not produce most of the world’s crude, Suhail Al Mazrouei, UAE’s Minister of Energy and Infrastructure, said on Wednesday. Oil prices have fallen this year on a weakening global demand outlook and rising supply from non-Opec+ countries. Concerns about fuel demand are primarily focused on China, the world’s second-largest economy and leading crude importer.

Oil prices post biggest weekly jump since early 2023 on fears of Israel striking Iran's oil facilities

Prospect of retaliatory attack has led to concerns over supply disruption in the market