By Adedapo Adesanya
The price of oil closed higher on Friday as the ongoing conflict in the Middle East and the election in the US next month lent support.
Brent crude gained $1.67 or 2.25 per cent during the session to trade at $76.05 a barrel and the US West Texas Intermediate (WTI) crude settled up by $1.59 or 2.27 per cent to $71.78 per barrel.
This saw Brent settle 4 per cent up on the week, while WTI settled 3.7 per cent higher.
Market analysts note that the tensions on the geopolitical front especially in the Middle East with Israel against Hamas and Hezbollah, backed by Iran, have supported largely decided prices in the last month.
According to the US Secretary of State, Mr Antony Blinken, there was a sense of urgency in getting to a diplomatic resolution to end the conflict in Lebanon between Israel and Hezbollah while calling for the protection of civilians.
Officials from the US and Israel are set to restart talks for a ceasefire and the release of hostages in Gaza in the coming days.
Investors continue to await Israel’s response to an Iranian missile attack on October 1 especially after it said it would not strike the country’s nuclear or oil targets and instead opt for military targets. If it had attacked the oil targets, it would have triggered some increase in oil prices.
Now, investors globally are piling into the Dollar and betting on rising volatility ahead of these next crucial two weeks leading up to the November 5 election in the US.
Also, the market is watching an election in Japan and looking forward to plans by three major central banks on interest rates and the UK government presenting its new budget.
Traders are also seeking more clarity on China’s stimulus policies, though analysts do not expect such measures to provide a major boost to oil demand.
Goldman Sachs on Thursday left its oil price forecasts unchanged at between $70 and $85 a barrel for Brent in 2025, expecting the impact from any Chinese stimulus to be modest relative to bigger drivers such as Middle East oil supply.
Bank of America is forecasting Brent crude to average $75 a barrel in 2025 without any rolling back of production cuts by the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ into next year, it said in a note on Friday.
The total number of active drilling rigs for oil and gas in the US saw no change this week, according to new data that Baker Hughes published on Friday, after falling last week.
The total rig count stayed at 585, according to Baker Hughes, down more than 6% from this same time last year.