Oil prices experienced a significant rise on Friday, marking their largest weekly gains in over a year, driven by escalating tensions in the Middle East. Brent crude futures climbed by 43 cents, settling at $78.05 per barrel, while U.S. West Texas Intermediate (WTI) crude rose by 67 cents to close at $74.38 per barrel.
The catalyst for this surge was Israel’s vow to retaliate against Iran for a recent missile attack, following the assassination of a Hezbollah leader. Analysts have warned of the potential for a broader conflict, which could severely impact oil supplies.
Despite an initial jump of nearly 2% during trading, prices retracted after U.S. President Joe Biden advised Israel to consider alternatives to striking Iranian oil facilities. On Thursday, oil benchmarks had surged over 5% after Biden confirmed U.S. discussions with Israel regarding support for strikes on Iranian energy infrastructure.
For the week, Brent crude rose over 8%, marking its largest weekly increase since January 2023, while WTI gained 9.1%, the highest since March 2023. Analysts noted that low global oil inventories, currently at record lows, suggest prices may remain elevated until the conflict is resolved.
JPMorgan analysts indicated that while an attack on Iranian energy facilities is not Israel’s preferred option, any disruption could lead to a price spike of $3 to $5 per barrel. Iran’s leadership has also threatened to target Israeli energy installations in retaliation.
Additionally, easing supply fears from Libya, where oilfields and export terminals are reopening after a political dispute, may help stabilize the market.