Oil surges over 4% on concerns that Middle East conflict could widen By Reuters

By Stephanie Kelly

NEW YORK (Reuters) – Oil prices leapt nearly $4 on Friday, with on track for its highest weekly gain since April, as investors worried the conflict in the Middle East could widen after Israel warned half of Gaza’s population to move south.

Brent futures rose $3.97, or 4.6%, to $89.97 per barrel as of 12:46 p.m. EDT (1646 GMT). US West Texas Intermediate (WTI) crude gained $3.88, or 4.7%, to $86.79 a barrel, after earlier breaking the $4 barrier.

Brent was set for a weekly gain of 6.3%, its biggest such increase since April. WTI was set to climb about 4.8% for the week, after both surged on Monday.

Market participants worried about disruptions to Middle Eastern exports after the weekend attack by Hamas on Israel threatened a wider conflict.

The United Nations said Israel’s military informed it late on Thursday that 1.1 million Palestinians in Gaza should relocate to the enclave’s south within the next 24 hours, in what Palestinians fear could be a precursor to a planned Israeli ground offensive following a deadly Hamas militant attack.

Countries urged Israel to hold off on plans for an all-out assault on northern Gaza, where more than a million civilians largely defied its order to evacuate before it goes after Hamas militants who slaughtered Israelis a week ago.

Iran’s Foreign Minister Hossein Amirabdollahian on Friday discussed the Israeli conflict with Hamas with the head of the powerful Tehran-backed Lebanese armed group Hezbollah, which has launched its own cross-border attacks on Israel.

“The market is concerned because we don’t know what that means. And could it impact oil?” said Phil Flynn, an analyst at Price Futures Group.

While oil flows have not yet been affected by the conflict, analysts and market observers are assessing how it could have an impact on the larger oil complex.

Also boosting prices on Friday, the U.S. imposed the first sanctions on Thursday on owners of tankers carrying Russian oil priced above the G7’s price cap of $60 a barrel, to close loopholes in the mechanism designed to punish Moscow for its invasion of Ukraine.

Russia is the world’s second-largest oil producer and a major exporter and the tighter U.S. scrutiny of its shipments could curtail supply.

This week, the Organization of the Petroleum Exporting Countries (OPEC) kept its forecast for growth in global oil demand, citing signs of a resilient world economy so far this year and expected further demand gains in China, the world’s biggest oil importer.

“Supply side issues remained the focus in the market,” Daniel Hynes, senior commodity strategist at ANZ, said in a note on Friday, adding that prices during early trade on Friday rose on the stronger U.S. sanctions enforcement.

Oil prices also shrugged off data released on Friday showing a month-on-month decline in Chinese crude imports.