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Concern that Iran might retaliate for an attack on Monday by
suspected Israeli warplanes on Iran's embassy in Damascus has
supported oil near a six-month high this week, despite dampening
factors such as rising U.S. inventories.
"As we have seen on numerous occasions since December, the risk
of a geopolitical event occurring during the weekend is once
again lifting the risk premium ahead of the weekend only to drop
again on Monday," said Saxo Bank's Ole Hansen.
Brent crude futures climbed 79 cents, or 0.9%, to $90.53 a
barrel by 0900 GMT, while U.S. West Texas Intermediate crude
futures rose 92 cents, or 1.1%, to $85.94.
Prices briefly pared gains after the International Energy Agency
cut its forecast for 2024 world oil demand growth and predicted
a further slowdown in 2025. Oil was set for a weekly fall as
Brent and WTI headed for a roughly 1% decline.
The U.S. expects an attack by Iran against Israel but one that
would not be big enough to draw Washington into war, according
to a U.S. official. Iranian sources said that Tehran has
signaled a response aimed at avoiding major escalation.
ING analysts said they expect oil's rally to retreat unless
there is a further escalation in the Middle East or supply
disruptions.
"We maintain our forecast for Brent to average $87 a barrel over
the second quarter of this year," the ING analysts added.
Friday's gains erased the losses from the previous session,
which was dominated by stubborn U.S. inflation that dampened
hopes for an interest rate cut as early as June.
U.S. Federal Reserve officials signaled on Thursday that there
was no rush to cut interest rates as U.S. inflation persisted.
(Additional reporting by Katya Golubkova in Tokyo and Jeslyn
Lerh in Singapore; Editing by Barbara Lewis)
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