Oil prices continued their rise on Friday. It is on track for a second week of gains on growing fears that the Israel-Gaza conflict could spread to the Middle East and disrupt supplies in one of the world’s top-producing regions.
Brent crude futures were up 97 cents, or 1.1%, at $93.35 a barrel by 0603 GMT. West Texas Intermediate (WTI) crude oil rose $1, or 1.1%, to $90.37 a barrel. The front-month November contract expires on Friday.
The more active December WTI contract rose 99 cents, or 1.1%, to $89.36 a barrel.
Both contracts are on track to post a second weekly gain as this week’s bombing of a hospital in Gaza and a possible ground offensive by Israeli troops raise fears of the conflict spreading across the Middle East.
The biggest concern is the Israeli Defense Forces’ entry into Gaza this weekend, which would mean crude oil is heading towards higher prices. Israeli Defense Minister Yoav Gallant gave the message to the troops gathered at the Gaza border on Thursday that the expected land attack was approaching.
The Pentagon stated that the United States intercepted missiles fired from Yemen to Israel, increasing concerns that the conflict will expand.
If WTI prices break the $91.50 resistance, there is an increased chance of rising toward the high last seen at $95.03 per barrel in late September.
Oil prices are also supported by forecasts that the deficit will widen in the fourth quarter after leading producers Saudi Arabia and Russia extended supply cuts until the end of the year due to low inventories, especially in the United States.
The U.S. Department of Energy said Thursday it plans to purchase 6 million barrels of crude oil for its Strategic Petroleum Reserves in December and January, in line with a plan to replenish Washington’s emergency stockpile.
Separately, the temporary lifting of US oil sanctions on OPEC member Venezuela is unlikely to require any policy changes by the OPEC+ producer group as the recovery in production is very likely to be gradual.
In fact, Venezuelan oil, which is unlikely to provide a truly rapid supply boost, is unlikely to succeed in allaying concerns about disruptions in the Middle East.