Oil rises as Middle East tensions mounts, set for weekly gains

Tokyo: Oil prices rose again on Friday and were on track for the first weekly gains this month, as rising tensions in the Middle East stoked fears of supply disruptions.

Brent crude futures were at USD 73.00 a barrel at 0303 GMT, up 38 cents, or 0.5 per cent, from their last close, rising for a fourth straight session. Brent was up 3.4 per cent for the week, on track for its first gain in three weeks.

US West Texas Intermediate (WTI) crude futures were at USD 63.32 per barrel, up 46 cents, or 0.7 per cent. WTI was also up for a fourth day and was headed for a weekly gain of 2.7 per cent, the first rise in four weeks.

A Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier in the week.

Earlier this week, US staff were evacuated from the American embassy in Baghdad, while US President Donald Trump ordered the deployment of an aircraft carrier group, B-52 bombers and Patriot missiles to the Middle East.

“When tensions are this high, with the US deploying a sizable military force, even a mistake or a tactical error by Iran could ignite the Middle East powder keg,” Stephen Innes, head of trading and market strategy at SPI Asset Management told Reuters by email.

“There are lots of supply risks with tensions this high,” he said, adding prices could test 2019 highs reached in April.

Still, Trump has told his top advisers he does not want to get the United States involved in a war with Iran, three US officials said on Thursday.

The market is also awaiting a decision from the Organization of the Petroleum Exporting Countries (OPEC) and other producers over whether to continue with supply cuts that have boosted prices more than 30 per cent so far this year.

A meeting of OPEC’s ministerial monitoring committee in Saudi Arabia this weekend will assess member states’ commitment to a deal reducing oil production, Iraq’s oil minister said on Thursday.