NEW YORK: Oil futures rose about 1 per cent on Friday, with US crude up 10 per cent and global benchmark Brent gaining 5 per cent in the week, on fears the United States could attack Iran and disrupt flows from the Middle East, which provides more than a fifth of the world's oil output.
US gasoline futures, meanwhile, jumped 4 per cent following a massive fire at Philadelphia Energy Solutions' refinery in Philadelphia, the largest on the US East Coast.
"The heightening of tensions between the United States and Iran has evolved as primary price motivator in spiking oil values," Jim Ritterbusch of Ritterbusch and Associates said in a note.
While the rise in US-Iranian tensions has largely driven the crude price gains, analysts said an early July meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies to reassess production targets, a potential softening of trade tensions between the United States and China and the refinery fire were also supporting prices.
Brent futures rose 75 cents, or 1.2 per cent, to settle at $65.20 a barrel, while the most active US West Texas Intermediate (WTI) crude contract ended the session up 36 cents, or 0.6 per cent, at $57.43.
Brent notched a gain of about 5 per cent for the week, its first weekly gain in five weeks, and WTI jumped about 10 per cent, its biggest weekly percentage gain since December 2016.
The US benchmark surged 5.4 per cent and Brent jumped 4.3 per cent on Thursday after Iran shot down a drone that the United States claimed was in international airspace and Iran said was over its territory.
US President Donald Trump said he had aborted a military strike on Iran because such a response to Tehran's downing of the unmanned US surveillance drone would have caused a disproportionate loss of life.
Iranian officials told Reuters that Tehran had received a message from Trump through Oman overnight warning that a US attack on Iran was imminent.
The officials said they had responded by saying that any attack would have regional and international consequences. They also said Supreme Leader Ayatollah Ali Khamenei was against talks but that they would convey the US message to him.
Trump spoke on Friday to Saudi Crown Prince Mohammed bin Salman about Middle East stability and the oil market, the White House said, after tensions with Iran prompted a rise in oil prices.
Tensions have been on the rise since US sanctions on Iran severely reduced oil exports from OPEC's third largest producer and as Washington blamed Tehran, which denies any role, for a series of attacks on oil tankers in the Gulf.
"There is no doubt that a severe disruption to the transit of oil through this vulnerable route would be extremely serious," said consultancy FGE Energy in a note.
The demand outlook has also improved, with appetite for risk assets rising after the European and the US central banks signaled possible rate cuts this week.
A weaker dollar also supported oil pricRead More – Source
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