Islamabad, Oct 5: Oil prices surged on Friday, marking the largest weekly gains in over a year, driven by escalating tensions in the Middle East.
Brent crude futures climbed by 43 cents (0.6%) to close at $78.05 per barrel, while US West Texas Intermediate (WTI) futures rose by 67 cents (0.9%) to settle at $74.38 per barrel.
The heightened risk of a broader regional conflict emerged after Israel vowed to retaliate against Iran, following a missile attack by Tehran after Israel’s assassination of a Hezbollah leader.
However, the gains were tempered after US President Joe Biden discouraged Israel from striking Iranian oil facilities, suggesting alternative strategies.
Earlier in the session, oil prices spiked by nearly 2% but later pulled back as Biden’s comments eased fears of imminent attacks on Iran’s energy infrastructure.
Thursday had seen a significant rise of over 5% in oil prices as Biden confirmed talks between the US and Israel on whether to strike Iranian energy targets.
On a weekly basis, Brent saw an 8% rise—the largest since January 2023—while WTI gained 9.1%, its highest weekly increase since March 2023.
Analysts warned that an attack on Iranian oil facilities could push prices up by $3 to $5 per barrel.
However, they noted that low global oil inventories, currently at their lowest levels on record, could keep prices elevated as the conflict continues.
Despite the risks, analysts from JPMorgan and Rystad suggest that the spare production capacity of OPEC+ could help mitigate the impact on prices.
Iran, which produces around 3.2 million barrels per day, plays a significant role in the global oil market. If its supply is disrupted, other OPEC+ members could boost output to stabilize prices.
