Oil prices rose on Friday and were on track for gains of almost 7% week-on-week, amid persistent tensions in the Middle East after Israel rejected a ceasefire offer from Hamas.

Brent crude futures rose 79 cents, or 0.97%, on the day to $82.42 a barrel by 1446 GMT, while US West Texas Intermediate crude futures rose $1.02, or 1.34%, to $77.24 a barrel.

Israeli forces continued deadly air strikes on Gaza on Friday, after the bombing of Gaza’s southern border city of Rafah on Thursday helped send oil prices up by around 3% in the previous session. “It takes two to tango to reach a ceasefire deal in the Middle East and tensions in the region have not gone away,” said UBS analyst Giovanni Staunovo.

Oil futures are into their fifth straight day of gains, buoyed this week by Israeli Prime Minister Benjamin Netanyahu’s rejection of a Hamas ceasefire proposal on Wednesday.

“With the words that, ‘no part of the Gaza Strip would be immune from Israel’s offensive’, it was not hard for oil participants to conclude that without even a passing regard for peace, there was not enough conflict-premium priced in,” PVM analyst John Evans said.

Read Oil perks up nearly 2%

Elsewhere, Ukraine launched drone attacks against two oil refineries in southern Russia on Friday, resulting in a fire at the Ilsky refinery. The Afipsky refinery, also in Krasnodar Krai which borders Crimea on the Black Sea and Azov Sea coast, was the other facility in the attack.

Russia is exporting more crude in February than it planned under an OPEC+ deal, following a combination of drone attacks and technical outages at its refineries. “Proof still needs to be provided that Russia is able to cut oil exports sufficiently even without weather-related constraints,” Commerzbank analyst Carsten Fritsch said on Friday in reference to the country’s OPEC+ cut quota.

Meanwhile, the US Treasury Department on Thursday sanctioned another three entities based in the United Arab Emirates and one tanker registered by Liberia for violating a cap placed on the price of Russian oil by a coalition of Western nations.

Published in The Express Tribune, February 10th, 2024.

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