Oil prices experienced a notable increase on Friday, climbing more than 2% following reports that Iran was planning a retaliatory strike on Israel from Iraq in the near future. This surge, however, still left the benchmarks set to end the week in decline. By 1024 GMT, Brent crude futures had risen by $1.72, reaching $74.53 per barrel, while U.S. West Texas Intermediate crude increased by $1.76 to settle at $71.02 per barrel.
According to the U.S.-based news outlet Axios, Israeli intelligence suggests that Iran is positioning to launch an attack from Iraq within days. This information, which came from two unnamed Israeli sources, points to a potential escalation in the ongoing conflict between the two nations. Analyst Ole Hvalbye from SEB Research noted that any further actions from Iran could remain limited, similar to Israel’s recent restrained response. Rather than aiming for all-out conflict, Iran’s actions may be more about signalling strength. The two countries have been engaged in a series of back-and-forth strikes within a broader regional conflict set off by the fighting in Gaza. Previous Iranian airstrikes on Israel, notably on October 1 and earlier in April, were largely repelled with minimal damage.
Despite the recent price increase, Brent crude is still on track for a nearly 2% weekly drop. Earlier in the week, oil prices fell sharply—by around 6%—after Israel’s October 26 strike, which notably avoided impacting oil or nuclear facilities in Iran. Another factor supporting oil prices has been the expectation that OPEC+ may postpone its planned production increase set for December. Concerns about weak oil demand combined with rising supply levels have led to discussions about potentially delaying the increase, with a decision expected as early as next week.
The upcoming U.S. presidential election is also influencing market sentiment, given the candidates’ differing policies on oil-producing nations Iran and Russia. At the same time, China’s ongoing financial stimulus and a recent uptick in manufacturing activity, as reported by both official and private-sector surveys, indicate a positive economic shift. However, Goldman Sachs analysts note that China’s growth will likely remain more domestically focused, contrasting with the broader expansion seen before the COVID-19 pandemic.
A mix of geopolitical tensions, anticipated policy decisions, and global economic signals continue to shape the oil market’s short-term outlook, creating a complex landscape for investors.
Challenger Energy Group plc (LON:CEG) is a Caribbean and Atlantic margin focused oil and gas company, with a range of petroleum assets located onshore in Trinidad and Tobago, and Suriname, and offshore in the waters of The Bahamas and Uruguay.
