Oil prices surged by over $1 per barrel on Friday, recovering from weekly losses amid rising geopolitical tensions in the Middle East. This increase follows reports that Iran is planning a retaliatory strike against Israel from Iraq in the near future. Brent crude futures rose by $1.31, or 1.80%, reaching $74.12 a barrel, while U.S. West Texas Intermediate crude futures increased by $1.35, or 1.95%, to $70.61 a barrel, after a 0.95% rise in the previous session.
Israeli intelligence indicates that Iran could launch an attack from Iraq before the U.S. presidential election on November 5, potentially using numerous drones and ballistic missiles, according to an Axios report citing unnamed Israeli sources.
Additionally, oil prices have been bolstered by speculation that OPEC+ might postpone a planned increase in oil production set for December due to concerns over weak demand and rising supply. A decision on this delay could be made as soon as next week, according to sources close to the situation.
Despite these gains, oil prices are expected to drop more than 1% for the week, still reeling from a 6% loss on Monday after Israel’s military action against Iran, which targeted military sites but did not disrupt oil or nuclear facilities.
An analyst at IG in Sydney, noted that while the crude market is experiencing gains, it has not fully recovered from the significant drop earlier in the week. He mentioned that WTI prices could rebound toward last Friday’s close of about $71.80, depending on the outcomes of the upcoming U.S. election and developments from China’s NPC standing committee meeting.
In China, a private-sector survey indicated a return to growth in manufacturing for October, aligning with an official report that showed similar expansion for the first time in six months, suggesting that stimulus measures are having a positive impact. In the U.S., gasoline inventories unexpectedly fell to a two-year low due to increased demand, and crude stockpiles also declined as imports decreased. The U.S. has achieved a record-high oil production rate of 13.4 million barrels per day in August, according to the Energy Information Administration (EIA).
