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Brent crude futures slipped 6 cents, or 0.1%, to $81.69 a barrel
by 0851 GMT, while U.S. West Texas Intermediate crude futures
rose 21 cents, or 0.3%, to $76.43 a barrel.
Prices rose about 3% in the previous session as Israeli forces
bombed the southern border city of Rafah on Thursday after Prime
Minister Benjamin Netanyahu rejected a proposal to end the war
in the Palestinian enclave.
The tensions have kept oil prices elevated, with Brent and WTI
both set to gain nearly 6% for the week.
"With the words that, 'no part of the Gaza Strip would be immune
from Israel's offensive', it was not hard for oil participants
to conclude that without even a passing regard for peace, there
was not enough conflict-premium priced in," PVM analyst John
Evans said.
U.S. officials made their most pointed criticism so far of
Israel's civilian casualties in Gaza as it turned the focus of
its offensive to Rafah.
A Hamas delegation arrived in Cairo on Thursday for ceasefire
talks with mediators Egypt and Qatar.
While the conflict has propped up prices, there has been no
impact on oil production.
Non-OPEC output from Norway and Guyana is increasing while
Russia is exporting more crude in February than it planned under
an OPEC+ deal, following a combination of drone attacks and
technical outages at its refineries.
On Friday, a fire broke out at the Ilsky oil refinery in
Russia's southern Krasnodar region, which was put out within one
hour, regional authorities said in a statement.
Meanwhile, the U.S. Treasury Department on Thursday sanctioned
another three entities based in the United Arab Emirates (UAE)
and one tanker registered by Liberia for violating a cap placed
on the price of Russian oil by a coalition of Western nations.
Deflation risks in China, the world's top crude oil importer,
are also weighing on global oil prices, IG analyst Tony Sycamore
said.
(Additional reporting by Florence Tan in SingaporeEditing by
David Evans)
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