Oil futures pared gains on Friday but still notched their biggest weekly increase in more than a year as President Biden aimed to discourage Tel Aviv from targeting Iran’s crude facilities following Tehran’s recent missile assault against Israel.
West Texas Intermediate (CL=F) advanced less than 1% to settle at $74.38 per barrel after soaring as much as 2.5% during the session. US crude futures still closed out the week up more than 9%, their best week since March 2023.
Brent (BZ=F), the international benchmark price, also advanced less than 1% to settle at $78.09 per barrel on Friday.
Oil pared session gains after President Biden commented on whether Israel’s retaliation against Iran will involve targeting the country’s petroleum infrastructure.
“If I were in their shoes I would think of other alternatives than attacking oil fields,” Biden told reporters at the White House on Friday afternoon.
Friday’s moves come after a more than 5% spike on Thursday when the president responded to the possibility of an attack on Iran’s petroleum infrastructure, which currently accounts for more than 3 million barrels of crude per day.
When asked whether he’d support targeting oil facilities, Biden responded, “We’re discussing that.”
Later in the day, a Pentagon spokesperson said during a briefing the US was talking with Israel about “what a response to Iran would look like” but declined to give further details on any targets.
Analysts at JPMorgan said on Friday morning the White House was unlikely to favor an attack on Iranian petroleum facilities given that the administration wants to avoid higher oil prices given the US elections are a month away.
“Hence, we assume it will not be Israel’s preferred course of action, but rather a secondary or even tertiary response to Iran’s possible escalation,” JPMorgan analysts Natasha Kaneva and Prateek Kedia wrote in a note on Friday.
Concerns over possible interruptions along the Strait of Hormuz in the Middle East, a chokepoint for oil shipments, have also sent prices higher.
“If there’s a stranglehold there, and there’s a serious blockage or serious delays, we should clear $80 [Brent]. That is going to push oil prices significantly higher. That is a game changer,” Blue Line Futures founder Bill Baruch told Yahoo Finance this week.
Futures spiked higher on Tuesday after Iran fired about 200 ballistic missiles in response to Israeli ground raids in southern Lebanon targeting Iranian-backed militants.
“Positioning in crude leading up into these events was very short and much of this [week’s] move has been shorts covering and not necessarily investors betting that crude continues to rally,” Rebecca Babin, US senior energy trader at CIBC Private Wealth, told Yahoo Finance on Friday.
Despite this week’s move higher, spare capacity from oil alliance OPEC+ could be keeping prices relatively contained.
Last week, the futures market slumped following a report that Saudia Arabia, the leader of the Organization of the Petroleum Exporting Countries, is determined to start unwinding voluntary production cuts later this year, even if it leads to lower crude prices.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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