Oil steady as Middle East tensions mounts, set for weekly gains

Oil steady as Middle East tensions mounts, set for weekly gains

TOKYO (Reuters) – Oil prices were steady on Friday, giving up earlier gains, and were on track for the first weekly increases this month, as rising tensions in the Middle East stoked fears of supply disruptions.

FILE PHOTO: A view shows a well head and a drilling rig in the Yarakta Oil Field, owned by Irkutsk Oil Company (INK), in Irkutsk Region, Russia March 11, 2019. REUTERS/Vasily Fedosenko/File Photo

Brent crude futures were at $72.61 a barrel at 0658 GMT, down 1 cent, from their last close, reversing earlier increases. Brent was up 2.9% for the week, on track for its first gain in three weeks.

U.S. West Texas Intermediate (WTI) crude futures were at $63.95 per barrel, up 8 cents. WTI was headed for a weekly gain of 2.1%, the first rise in four weeks.

A Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier in the week.

Earlier this week, staff were evacuated from the U.S. embassy in Baghdad, while U.S. President Donald Trump ordered the deployment of an aircraft carrier group, B-52 bombers and Patriot missiles to the Middle East.

“When tensions are this high, with the U.S. deploying a sizable military force, even a mistake or a tactical error by Iran could ignite the Middle East powder keg,” Stephen Innes, head of trading and market strategy at SPI Asset Management told Reuters by email.

“There are lots of supply risks with tensions this high,” he said, adding prices could test 2019 highs reached in April.

Still, Trump has told his top advisers he does not want to get the United States involved in a war with Iran, three U.S. officials said on Thursday.

The market is also awaiting a decision from the Organization of the Petroleum Exporting Countries (OPEC) and other producers over whether to continue with supply cuts that have boosted prices more than 30% so far this year.

A meeting of OPEC’s ministerial monitoring committee in Saudi Arabia this weekend will assess member states’ commitment to a deal reducing oil production, Iraq’s oil minister said on Thursday.

Reporting by Aaron Sheldrick; additional reporting by Colin Packham in SYDNEY; editing by Richard Pullin and Christian Schmollinger

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