U.S. crude posted its biggest weekly gain in more than a year on Friday as traders worried that Israel could attack Iranian crude facilities in retaliation for Tehran's ballistic missile attack.
U.S. benchmark West Texas Intermediate crude surged 9.09% this week, its biggest weekly gain since March 2023.
U.S. crude surged about 5% on Thursday after President Joe Biden said the White House was discussing Israeli attacks on Iran's oil industry. Biden clarified those remarks on Friday, discouraging Israel from targeting the oil fields.
“Israel has not yet decided what actions they are going to take – that is under discussion,” Biden told reporters at a White House briefing. “If I were in their shoes, I would look at options other than attacking the oil fields.”
Here are Friday's closing energy prices:
- West Texas Intermediate Oil November contract: $74.38 per barrel, up 67 cents, or 0.91%. U.S. crude oil prices have risen nearly 4% so far this year.
- Brent December contract: $78.05 a barrel, up 43 cents, or 0.55%. The global benchmark has gained more than 1% so far this year.
- RBOB gasoline November contract: $2.0958/gallon, up 0.15%. Gasoline has changed little so far this year.
- natural gas November contract: $2.854/thousand cubic feet, down 3.91%. So far this year, natural gas leads by more than 13%.
Daan Struyven, chief oil analyst at Goldman Sachs, said oil prices would rise by $10 to $20 a barrel if Israeli attacks reduced Iranian production by 1 million barrels per day over a sustained period. .
Struvan said how high oil prices can rise depends on whether OPEC uses idle oil production capacity to fill the gap.
Oil prices have risen from a lower baseline despite surging this week on geopolitical tensions. Just last month, prices hit their lowest levels in nearly three years as bearish sentiment swept the market amid weak demand from China and plans by OPEC+ to increase production.
“The risks to the outlook for oil prices are certainly substantial,” Struvan told CNBC's “Squawk Box Asia” on Friday. Oil markets had largely ignored it until Iran fired nearly 200 ballistic missiles at Israel on Tuesday. escalating war in the Middle East.
“Until today, the geopolitical risk premium priced in by the oil market has been largely quite modest,” Struvan said. Brent crude prices were around $77 a barrel, still below Goldman's fair view based on inventory levels, he said. Perceptions of value.
Risk premiums have been modest because there have been no sustained supply disruptions over the past two years despite high geopolitical tensions, Struvan said. Goldman Sachs analysts said there is about 6 million barrels per day of spare capacity that could come online, offsetting the tightness caused by most supply disruptions.