Oil Incurs Biggest Weekly Loss Since February As Middle East Tensions Lose Influence

But analysts still think Middle East turmoil could jack Brent strike prices up to $150: File Image/Pixabay

Despite the Iran/Israel sabre-rattling along with the two countries launching unprecedented direct military attacks against each other this week, two benchmarks on Friday settled only slightly higher.

Brent settled up 18 cents at $87.29 per barrel, while West Texas Intermediate settled up 41 cents to $83.14 per barrel; both benchmarks posted their biggest weekly decline since February, having fallen around 4 percent since Monday.

Tehran played down a supposed attack from Israel that caused explosions in the Iranian city of Isfahan on Friday and said it did not plan to retaliate.

Joshua Mahony, chief market analyst at Scope Markets, remarked, "Whilst the initial spike in oil may have highlighted the initial fear of further escalation, we have seen both equities and crude reverse some of those preliminary moves."

But analysts were still concerned about the potential effect of geopolitical tensions, causing Goldman Sachs and Commerzbank to raise their Brent forecasts on Friday (a move that was also inspired by rising demand and restrained output from the Organization of the Petroleum Exporting Countries).

For its part, Bloomberg noted that "The total amount of bullish call options on Brent held by traders is at the highest since 2020, and there are more calls with a strike price of $110 over the next 12 months than any other contract.

"There are even calls with a strike price of $150 or more, an indication that some market participants are betting on — or protecting themselves in the event of — sky-high oil prices exceeding even the spike that followed Russia's invasion of Ukraine."

As if helping to ensure that tightness would continue in the long term, U.S. president Joe Biden on Friday finalized The Public Lands Rule that restricts access to drilling and mining on more than 13 million acres in Alaska's National Petroleum Reserve, on the pretext of honouring the history and culture of Alaskan natives.

Still, Baker Hughes data published Friday showed that U.S. crude production stayed the same for the sixth week in a row at an average of 13.1 million barrels per day (bpd) for the week ending April 12, a decrease of only 200,000 bpd from the country's all-time high of 13.3 million bpd.

Baker Hughes also reported that the total rig count fell by 2 to 619 this week, compared to 753 rigs this same time last year.