Oil Gains As Israel Begins Strike Again Iran And U.S. Elections Draw Nearer

But prices won't rise much even if all out war breaks out, says one analyst: File Image/Pixabay

Uncertainty over a variety of familiar issues proved to be good for oil prices on Friday: they settled  higher and gained about 4 percent on the week.

Phil Flynn, senior market analyst at Price Futures Group Inc., explained, "It seems like the market is bouncing around in a holding pattern till we get an answer to some of these questions on Israel, the war and the [U.S. presidential] election.

"The election is creating uncertainty in a lot of markets and people are pulling in their horns a little bit, not ready to be making big commitments because of the potential for spikes, volatility and uncertainty."

Brent settled up $1.67 at $76.05 per barrel and achieved a 4 percent weekly gain; West Texas Intermediate settled up $1.59 to $71.78 per barrel and logged a 3.7 percent weekly gain.

Rob Haworth, senior investment strategist at US Bank, noted that "If we had progress on cease-fire talks, that would probably calm the market a little more, but that's not happening, so the market does have to tense up ahead of the weekend."

The New York Times reported that Iran has ordered its armed forces to be prepared for war, though it supposedly is also trying to avoid it, while Saudi Arabia has been assured by the U.S. that if Israel's anticipated retaliation against the Islamic republic causes a spread of hostilities, it will help defend the kingdom.

Israel began its strike against Iranian military targets shortly after the Times report was published.

Bloomberg pointed out that that the "whipsaw" pattern of crude trading of late has also been heavily influenced by "concerns that the market may face a glut next year, driven by output growth from non-OPEC+ producers and plans by the cartel to ease curbs."

Bank of America on Friday stated in a note that it is forecasting Brent crude to average $75 per barrel in 2025 without any rolling back of production cuts from the Organization of the Petroleum Exporting Countries into next year.

This is not significantly different from what Michael Kern, analyst at Oilprice.com, predicted for near-term trading: he wrote on Friday that the U.S. elections and the prospect of war notwithstanding, "Brent and WTI will only post minor week-over-week increases, trending around $75 and $71 per barrel respectively, as a stronger dollar and a larger-than-expected U.S. inventory spike limited the upside."