Oil rose slightly on Friday but fell for the week after Iran failed to take Israel’s attack on its territory seriously. It became a sign that an escalation of hostilities in the Middle East might be avoided.
Brent futures rose 18 cents, or 0.21%, to $87.29 a barrel. The May WTI crude oil contract rose 41 cents, or 0.5%, to $83.14 a barrel. The more active June contract closed 12 cents higher at $82.22 a barrel.
Investors were closely watching Israel’s response to Iran’s drone and missile attacks on April 13.
Both indicators rose more than $3 a barrel at the beginning of the session after reports of explosions in Isfahan, Iran. But gains were capped after Tehran downplayed the incident and said it had no plans to retaliate.
According to data, Iran is the third largest oil producer in the Organization of Petroleum Exporting Countries (OPEC). US lawmakers added sanctions on Iran’s oil exports to the pending Ukraine aid package after Tehran attacked Israel last week.
OPEC+ members, led by Saudi Arabia and Russia, agreed last month to extend voluntary production cuts of 2.2 million barrels per day (bpd) until the end of June. This helped keep oil prices high.
According to reports, the International Monetary Fund expects OPEC+ to start increasing oil production starting by July. Investors are not ruling out the possibility that tensions in the Middle East could disrupt supply.
Prices have fallen around 3% since Monday as oil’s risk premium has gradually eased. Both indicators posted their biggest weekly losses since February.
Analysts raised their Brent crude oil forecasts on Friday, taking into account geopolitical tensions as well as rising demand and the possibility of limited supply from OPEC and its allies (OPEC+).
Oil demand is growing at a healthy pace and supply must also be constrained due to the extension of OPEC+ voluntary production cuts.
U.S. energy companies added oil and gas rigs this week for the first time in five weeks, Baker Hughes said in the report on Friday. The number of oil and natural gas drilling rigs increased by 2 in the week until April 19, reaching 619.
The U.S. Commodity Futures Trading Commission (CFTC) said Friday that money managers reduced their net long-term crude futures and options positions in the U.S. through April 16.
