Oil heading for weekly gain as the Middle East tension intensifies

Oil heading for weekly gain as the Middle East tension intensifies

Due to a mix of drone strikes and technical difficulties at its refineries, Russia is shipping more petroleum than it was supposed to under the terms of the OPEC+ agreement in February.

For the fifth day in a row, oil futures have increased this week due to Israeli Prime Minister Benjamin Netanyahu's rejection of a Hamas ceasefire proposal on Wednesday.

Week-over-week, oil prices were expected to rise by 6% due to ongoing Middle East tensions. Refined product markets were squeezed as a result of refinery disruptions, and Israel rejected the Hamas ceasefire plan for acceptance.

By 11:49 a.m. EST (1649 GMT), U.S. West Texas Intermediate oil futures increased 41 cents, or 0.5%, to $76.63 a barrel, while Brent crude futures up 35 cents, or 0.4%, to $81.98 a barrel. US oil had a $1 increase in the previous session.

For the fifth day in a row, oil futures have increased this week due to Israeli Prime Minister Benjamin Netanyahu's rejection of a Hamas mediation proposal on Wednesday.

After Israeli troops began their deadly bombings on the Gaza Strip on Friday, after Thursday's shelling of the southern border city of Rafah, oil prices increased by about 3% in the previous session.

"With the words that, 'No part of the Gaza Strip will remain undisturbed by Israeli attack', it was not rocket science for oil participants to conclude that, without the slightest acknowledgment of peace, there was an insufficient conflict-premium," said John Evans, a PVM analyst.

Strength in the price of gasoline and diesel helped sustain crude oil futures while substantial unexpected and scheduled refinery outages in the United States affected product markets.

The week saw an increase in gasoline futures of 9.1% to $2.33 per gallon and heating oil futures of 11.3% to $2.94 per gallon.

Drone attacks by Ukraine on two oil refineries in southern Russia on Friday caused the Ilsky facility to catch fire. The second site targeted was the Afipsky refinery, located near Krasnodar Krai, which borders Crimea on the Black and Azov Seas.

Due to a mix of drone strikes and technical difficulties at its refineries, Russia is shipping more petroleum than it was supposed to under the terms of the OPEC+ agreement in February.

Regarding Russia's OPEC+ quota cutbacks, Commerzbank analyst Carsten Fritsch indicated on Friday that "evidence still needs to be provided that Russia has the capacity of substantially cutting its crude oil exports even without weather-related disruptions."

In the meanwhile, a coalition of Western countries placed price caps on Russian oil, and the US Treasury Department on Thursday sanctioned three more United Arab Emirates (UAE)-based companies as well as a vessel registered in Liberia for breaking those limitations.