Oil rises for 2nd week amid Israel-Hamas war developments

Oil prices jumped for a second week as developments in the Middle East raised concerns that the conflict may spread, though US efforts to delay Israel’s invasion of Gaza caused prices to edge down on Friday.

After initially resisting a delay in what officials said would be a massive military operation to eradicate Hamas, Israel agreed under US pressure to hold off on its attack, Bloomberg reported, citing people familiar with the effort. Publicly, Israel has shifted its tone on plans for the operation in recent days, suggesting a more limited approach that may reduce civilian casualties. President Joe Biden said Friday that trucks carrying aid supplies will cross into Gaza within 24 to 48 hours.

West Texas Intermediate’s (WTI) more-active December contract fell to settle near $88 a barrel on Friday, while still posting a second straight weekly gain.

“Underlying fundamentals are playing second fiddle to the tragic events in Israel and Gaza,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd.

The war has also led to a frenzy of activity in the options market as traders position around the risk of further surges in crude. Trading of bullish calls has outpaced that of bearish puts every day for almost a month.

Still, even a spread in the conflict might not lead to sustained higher prices, JPMorgan Chase & Co. analysts including Natasha Kaneva said in a report. Geopolitical risks have pushed prices about $7 higher than they would otherwise be, they said.

Away from the conflict, the US Energy Department said on Thursday that it aimed to buy as much as 6 million barrels for the Strategic Petroleum Reserve as it continues to replenish the stockpile after a record withdrawal.