NEW YORK: Oil prices rose about 1% on Friday to a one-week high on reports Iran was preparing a retaliatory strike on Israel from Iraq in the coming days.
Brent futures gained $1.02, or 1.4%, to $73.83 a barrel by 10:59 a.m. EDT (1459 GMT), while U.S. West Texas Intermediate (WTI) crude was up $1.05, or 1.5%, at $70.31.
That put both crude benchmarks higher for a third day in a row and on track for their highest closes since Oct. 25.
For the week, however, both contracts were still down about 3% after gaining 4% last week.
U.S. news website Axios reported on Thursday that Israeli intelligence suggests that Iran is preparing to attack Israel from Iraq within days, citing two unidentified Israeli sources.
“Any additional responses from Iran might remain restrained, similar to Israel’s limited strike last weekend, hence primarily intended as a demonstration of strength rather than an invitation to open warfare,” said SEB Research analyst Ole Hvalbye.
Iran and Israel have engaged in a series of tit-for-tat strikes within the broader Middle East warfare set off by fighting in Gaza. Previous Iranian air attacks on Israel on Oct. 1 and in April were mostly repelled, with only minor damage.
Iran is a member of the Organization of the Petroleum Exporting Countries (OPEC) and produced about 4 million barrels per day (bpd) of oil in 2023, U.S. Energy Information Administration data showed.
Iran was on track to export around 1.5 million bpd in 2024, up from an estimated 1.4 million bpd in 2023, according to analysts and U.S. government reports.
Iran backs several groups that are currently fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen.
The U.S. asked Lebanon to declare a unilateral ceasefire with Israel to revive stalled talks to end hostilities between Israel and Hezbollah.
Israel pounded Beirut’s southern suburbs with a series of powerful airstrikes early Friday after issuing evacuation orders to residents.
Oil prices were also supported by expectations that OPEC+ could delay December’s planned increase to oil production by a month or more on concern over soft oil demand and rising supply. A decision could be made as early as next week.
OPEC+ includes OPEC and its allies like Russia.
US job growth stalls
In the U.S., job growth almost stalled in October as labor strikes in the aerospace industry depressed manufacturing employment while hurricanes impacted the response rate for the payrolls survey, making it hard to get a clear picture of the labor market ahead of next week’s presidential election.
Polls show the U.S. presidential race is a toss-up between Democratic Vice President Kamala Harris or Republican former President Donald Trump as the country’s next president.
Economists, meanwhile, said they expect the U.S. Federal Reserve to sort through the job data and cut interest rates by 25 basis points next Thursday.
After hiking rates aggressively in 2022 and 2023 to tame a surge in inflation, the Fed started to lower rates in September.
Lower rates decrease borrowing costs, which can boost economic growth and demand for oil.
Comments