Oil rises in price on reports that Iran is preparing a strike on Israel

SINGAPORE – Oil prices extended gains on Friday, rising more than $1 a barrel to pare a week of losses as geopolitical tensions increased in the Middle East following reports Iran was preparing a retaliatory strike against Israel from Iraq in the coming days.

Brent crude futures for the January contract were up $1.41, or 2%, at $74.22 a barrel by 4:56 a.m. GMT.

U.S. West Texas Intermediate (WTI) crude futures rose $1.46, or 2.1%, to $70.72 a barrel after rising 0.95% in the previous session.

Israeli intelligence has suggested Iran is preparing to attack Israel from Iraq in the coming days, possibly ahead of the Nov. 5 U.S. presidential election, Axios reported Thursday, citing two unidentified Israeli sources.

The attack was expected to come from Iraq using large numbers of drones and ballistic missiles, an Axios report said.

Oil prices were also supported by expectations that OPEC+ could delay a planned December oil production increase by a month or more, four sources close to the matter told Reuters on Wednesday, citing concerns about weak oil demand and rising offers. A decision to delay the increase could be made as early as next week, two sources said.

However, prices are down more than 1% for the week, struggling to recover from Monday’s 6% loss after an Oct. 26 Israeli strike on Iran’s military bypassed oil and nuclear facilities and did not disrupt energy supplies.

“Even though the crude oil market looked to post gains for a third day in a row, it was unable to fully erase the large gap to the downside that followed Monday’s open,” said IG market analyst Tony Sycamore in Sydney.

However, the rebound in WTI oil prices should return to last Friday’s close of around $71.80, he said, as tensions in the Middle East returned to focus.

“After this, however, all bets are off. I think it will depend on who wins the U.S. election and what fiscal stimulus details, if any, come out of the NPC Standing Committee meeting,” Sycamore said, referring to major developments in the U.S. and China, the world’s biggest consumers. oil in the world next week.

In China, manufacturing activity returned to growth in October, a private sector survey showed on Friday, echoing an official survey on Thursday that showed manufacturing activity rose in October for the first time in six months. Both studies show that incentives have an effect.

U.S. gasoline inventories unexpectedly fell last week to a two-year low amid increased demand, the Energy Information Administration (EIA) said Wednesday, while crude oil inventories also fell unexpectedly due to lower imports.

The world’s largest oil producer produced a record monthly level of 13.4 million barrels per day in August, according to the EIA.

Reuters