Oil Eases as Investors Remain Cautious Over Potential Mideast Supply Disruption – Reuters

By Yuka Obayashi

TOKYO – Oil prices softened on Friday following a rally from the previous day. However, they are still on track for a second consecutive weekly gain as investors assess the effects of hurricane damage on U.S. demand versus potential supply disruptions stemming from possible Israeli military action against Iranian oil facilities.

Brent crude futures declined by 39 cents, or 0.5%, to reach $79.01 a barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped by 32 cents, or 0.4%, settling at $75.53 per barrel.

For the week overall, both oil benchmarks are expected to register gains of 1% to 2%.

In the U.S., Hurricane Milton moved into the Atlantic on Thursday after wreaking havoc across Florida, resulting in at least 10 deaths and leaving millions without power. This destruction might lead to reduced fuel consumption in some regions of the country, the world’s largest oil producer and consumer.

"Investors are evaluating how hurricane damage could impact the U.S. economy and fuel demand," noted Hiroyuki Kikukawa, president of NS Trading, a subsidiary of Nissan Securities. "Oil prices are likely to remain around the current 200-day average levels, with the key concern being whether Israel will retaliate against Iranian oil facilities," he added.

As of now, the 200-day average for Brent is at $81.68 a barrel, and for WTI, it stands at $77.36.

Crude prices surged earlier this month after Iran launched more than 180 missiles at Israel on October 1, which raised tensions regarding a potential response targeting Iranian oil infrastructure. Although Israel has not yet retaliated, crude prices have eased and remained stable during the week.

Israeli Defense Minister Yoav Gallant has stated that any attack on Iran would be "lethal, precise, and surprising." Iran supports several groups in conflict with Israel, including Hezbollah in Lebanon, Hamas in Gaza, and the Houthis in Yemen.

The recent Israeli airstrikes in central Beirut resulted in 22 fatalities and over 117 injuries, according to Lebanon’s health ministry. Security sources in Lebanon reported that at least one high-ranking Hezbollah official was among those targeted.

In the Gulf region, states are urging Washington to discourage Israel from targeting Iran’s oil facilities due to fears that their own oil installations could come under threat from Tehran’s proxies if hostilities escalate, according to three sources in the Gulf.

On the supply side, Libya’s National Oil Corporation announced on Thursday that it has restored production levels close to those before the central bank crisis, achieving output of 1.22 million barrels per day.