Oil heads higher on Middle East concerns

London — Oil prices extended gains on Friday and were on track to rise for a second week on heightened fears that the Israel-Gaza crisis may spread in the Middle East and disrupt supply from one of the world’s top-producing regions.

Brent crude futures was up 75c to $93.13 a barrel by 8.15am GMT. US West Texas Intermediate crude was at $90.04 a barrel, up 67c. The front-month November contract expires on Friday.

The more active December WTI contract was up 81c at $89.18 a barrel.

Both front-month contracts are set to record a second weekly gain as an explosion at a Gaza hospital this week and an anticipated ground invasion by Israeli troops heightened fears of the conflict spreading in the Middle East.

“The escalation of tension that we’re likely to see with regard to the IDF [Israel Defence Forces] entering Gaza this weekend means the risk to crude oil are towards higher prices,” IG analyst Tony Sycamore said.

Israeli defence minister Yoav Gallant told troops gathered at the Gaza border on Thursday that they would soon see the Palestinian enclave “from inside”, suggesting an expected ground invasion could be nearing.

Adding to the anxiety about the broadening of the conflict, the Pentagon said the US had intercepted missiles fired from Yemen towards Israel.

Oil prices are also supported by forecasts of a widening deficit in the fourth quarter after top producers Saudi Arabia and Russia extended supply cuts to the end of the year and amid low inventories especially in the US.

Washington is seeking to buy 6-million barrels of crude for delivery to the Strategic Petroleum Reserve in December and January, as it continues its plan to replenish the emergency stockpile, the US department of energy said on Thursday.

Separately, a temporary lifting of US oil sanctions on Opec member Venezuela is unlikely to require any policy changes by the Opec+ producer group for the time being as a recovery in production is likely to be gradual, Opec+ sources said.

“Venezuelan oil production will not be a significant factor in shaping the global oil balance in the foreseeable future,” said Tamas Varga of oil broker PVM in a note on Friday.

Reuters