Oil Prices Inch Up Amid Middle East Tensions

(Reuters) – Oil prices inched up in early Asian trading hours on Friday, maintaining strong weekly gains as investors weighed the Middle East conflict and potential disruptions in crude flows against a well-supplied global market.

Brent crude futures rose by 9 cents, or 0.12%, reaching $77.71 a barrel as of 0010 GMT. Meanwhile, U.S. West Texas Intermediate crude futures increased by 8 cents, or 0.11%, to $73.79 a barrel.

Both benchmarks are on track for weekly gains of approximately 8%.

On Thursday, President Joe Biden mentioned that the U.S. was considering strikes on Iran’s oil facilities in response to Tehran’s missile attack on Israel, which contributed to a 5% rally in oil prices.

The market is starting to price in the possibility of supply disruptions in the Middle East, which accounts for about a third of global oil supply, according to ANZ analyst Daniel Hynes.

Hynes stated, “The move has been exacerbated by bearish investors unwinding their bets on lower prices. The move could be extended if investors start building bullish positions in oil.”

However, concerns about supply have been mitigated by OPEC’s spare production capacity and the fact that global crude supplies have not yet been disrupted by unrest in the Middle East.

On Thursday, Libya’s eastern-based government and the Tripoli-based National Oil Corporation announced the reopening of all oilfields and export terminals after resolving a dispute over the leadership of the central bank, ending a crisis that had severely reduced oil production.

Both Iran and Libya are OPEC members. In 2023, Iran produced around 4.0 million barrels per day, while Libya produced approximately 1.3 million bpd, according to data from the U.S. Energy Information Administration.