Oil prices increased during the week ending Oct. 20 as markets feared worsening supply shortages due to escalating geopolitical tensions after Israel's attacks in the Palestinian enclave of Gaza.
International benchmark Brent crude traded at $93.46 per barrel at 3.28 p.m. local time (1228 GMT) on Friday, increasing by around 2.83% relative to the closing price of $90.89 a barrel on Friday last week.
West Texas Intermediate (WTI), the American benchmark, was trading at $89.17 a barrel at the same time on Friday, up almost 1.68% from last Friday's session, which closed at $87.69 per barrel.
Both benchmarks rose over concerns that rising tensions in the Middle East, fueled by the ongoing conflict between Palestine and Israel, will spill over into other regional countries and impair oil supplies.
Market players are attempting to gauge the potential impact of the violence, which began on Oct. 7, as well as the effect it will have on crude oil supply lines as the crisis escalates.
During the week, oil prices surged to $93 a barrel over Iran's call for an oil embargo on Israel following an Israeli airstrike on the Al-Ahli Baptist Hospital in Gaza, which killed more than 500 people late Tuesday.
Meanwhile, fears of a breakdown in the normalization process between Saudi Arabia and Israel, both of which do not have formal diplomatic relations, also lent support to oil price rises.
Supporting further price increases and strong demand, the Energy Information Administration (EIA) on Thursday revealed a drop in oil inventories of 4.5 million barrels per day to 419.7 million barrels, compared to the American Petroleum Institute's expectation of a drawdown of around 4.4 million barrels.
Oil prices further spiked on Friday with the US announcement that it would replenish its Strategic Petroleum Reserves (SPR) by adding a total of 6 million barrels to its SPR between December 2023 and January 2024 due to the escalating geopolitical tensions in the Middle East.
Moreover, the weakening dollar as a result of US Federal Reserve Chair Jerome Powell's remarks on Thursday, in which he said that lower economic growth is required to curtail high inflation, also put upward pressure on oil prices.
- Oil prices under downward influence as US sanctions on Venezuelan oil exports relax
On Wednesday, the US decided to partially ease sanctions on the oil, gas and gold sectors in Venezuela following the resumption of talks between the government and the country's opposition in Barbados.
The decision by the US administration came in response to a political agreement signed between representatives of the government of Nicolas Maduro and the US-backed opposition to hold elections next year.
Oil prices dropped on Thursday on reports of the lifting of sanctions on Venezuela's oil exports, easing tight supply fears.
However, investor caution amid the escalating tension in the Middle East and data signaling a rebound in China's economy capped price declines.
Market sentiment was boosted after data showed that China's value-added industrial output, an important economic indicator, rose 4% year on year in the first three quarters of this year.
By Duygu Alhan
Anadolu Agency
energy@aa.com.tr