Oil surged the most in two weeks after Israel’s military said it was “expanding ground activity” in Gaza this evening, reviving concerns about the conflict spreading more broadly.
The announcement from the Israeli Defense Forces pushed West Texas Intermediate to settle above $85 a barrel after a volatile session that saw prices whipsawed by developments in the Middle East conflict. The drumbeat of geopolitical headlines that buffeted oil prices on Friday continued a trend that has driven oil’s 30-day volatility to the highest in three months.
Still, crude posted its first weekly drop since the conflict began, falling 3.6%. Throughout the week, bearish market sentiment and earlier signs of Israel rethinking the scope of its ground invasion undercut the war’s risk premiums.
Crude markets have been roiled since Hamas’s attack on Israel on Oct. 7, initially surging on fears of a wider conflict. Prices have since pared those gains as the war remained contained and concerns surfaced about weaker physical demand. All told, crude is up about 3.3% since the conflict started.
On Friday, WTI swung by more than $2, a range that has become typical since the conflict’s inception. Prices climbed early in the session amid US strikes on two Iran-linked facilities in Syria, then pared those gains after Al-Jazeera reported that Qatari mediation on a cease-fire is moving “quickly.” Prices ultimately rebounded to the highs of the day on the Israeli military’s announcement of expanded operations.
Since the fighting broke out, futures and options markets have been volatile on Fridays as traders try to gauge how to position ahead of the weekend, with any escalation running the risk of price spikes at the following week’s market open.
The Middle East war premium in futures is partially masking a recent slump in prices of some physical barrels, suggesting demand may be weakening. Global stock markets have also fallen this week, while a gauge of the dollar is near the highest since November, increasing the price of commodities for most buyers.
- WTI for December delivery rose $2.33 to settle at $85.54 a barrel in New York.
- Brent for December settlement advanced $2.55 to settle at $90.48 a barrel.