Oil prices are on track for the biggest weekly gain in two years during the week ending October 4 amid expectations of Israeli strikes on Iran's oil infrastructure.
The International benchmark Brent crude traded at $77.98 per barrel at 3.19 p.m. local time (1219 GMT) on Friday, up by around 0.7% relative to the closing price of $77.44 a barrel last week.
West Texas Intermediate (WTI), the American benchmark, traded at $73.83 a barrel at the same time on Friday, an increase of about 0.6% from last Friday's session, which closed at $73.38 per barrel.
Both benchmarks traded higher as regional tensions escalated further after Iran fired around 180 ballistic missiles at Israel on Oct.1.
Iran's Islamic Revolutionary Guard Corps (IRGC) said the attack was in response to the assassinations of Hamas leader Ismail Haniyeh, Hezbollah leader Hassan Nasrallah and IRGC commander Abbas Nilforoshan.
Israeli Prime Minister Benjamin Netanyahu said Iran made a 'big mistake' and 'will pay for it.'
US President Joe Biden's remarks about a possible retaliation by Israel also lent upward support to oil prices on Thursday.
Biden left the door open to the possibility of an Israeli attack on Iranian oil facilities, saying, 'We're discussing that.'
Following the statements, both Brent and WTI prices increased by nearly 5%.
The direct involvement of Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), raised the prospect of disruptions to oil supplies.
According to OPEC's latest monthly oil report, the country produced 3.3 million barrels per day in August.
Meanwhile, cross-border fighting between Israel and Lebanon also aided upward price movements by causing risk premium in the oil markets.
Israeli army announced on early Wednesday its intention to attack 24 towns and villages in southern Lebanon, warning residents to evacuate towards the northern part of the Litani River, the last point in the south claiming that Hezbollah fighters and weapons were present in the area.
In response to the Israeli attacks, the Lebanese Hezbollah group announced Wednesday that it targeted Israeli army soldiers, sites and artillery bunkers in at least five areas in northern Israel.
Moreover, uncertainty over the US Federal Reserve's (Fed) next steps continue to impact oil prices.
In light of these developments, expectations for a 75 basis point rate cut by the end of the year remain strong, with a 66% probability of a 25 basis point cut predicted for November. It is anticipated that the country's rate drop will weaken the dollar against other currencies, boosting oil demand.
Meanwhile, data from the US Energy Information Administration (EIA) released late Wednesday tampered further price hike.
US commercial crude oil inventories increased by around 3.9 million barrels during the week ending Sept. 27, against the market prediction of a 1.5 million barrels draw. Gasoline inventories also rose by about 1.1 million barrels during the same period.
The data put downward pressure on prices by easing supply disruption worries.
By Duygu Alhan
Anadolu Agency
energy@aa.com.tr