Oil rises on Middle East conflict, but supply outlook limits gains By Reuters

(Reuters) – Oil prices rose in early Asian trading on Friday, holding on to strong weekly gains as investors weighed conflict in the Middle East and potential disruption to crude flows against a well-supplied global market.

Futures were up 9 cents, or 0.12 percent, at $77.71 a barrel as of 0010 GMT. U.S. West Texas Intermediate crude futures rose 8 cents, or 0.11 percent, to settle at $73.79 a barrel.

Both benchmarks were on track for weekly gains of around 8%.

President Joe Biden said Thursday that the US is discussing strikes on Iran’s oil facilities in retaliation for Tehran’s missile attack on Israel. The comments contributed to a 5% rise in oil prices.

The market has started to price in the likelihood of supply disruptions in the Middle East, which accounts for about a third of global supply, ANZ analyst Daniel Hynes said.

“The move was exacerbated by bearish investors who canceled their bets on lower prices. The move could be extended if investors start building bullish positions in oil,” Hynes said.

However, supply fears were tempered by OPEC’s spare production capacity and the fact that global crude supplies have not yet been disrupted by unrest in the Middle East.

Libya’s eastern government and Tripoli-based National Oil Corp announced on Thursday the reopening of all oil fields and export terminals after a dispute over central bank leadership was resolved, ending a crisis that has significantly reduced oil output.

Iran and Libya are both members of OPEC. Iran, which operates under US sanctions, produced about 4.0 million barrels per day of fuel in 2023, while Libya produced about 1.3 million barrels per day last year, according to data from the US Energy Information Administration .