Oil prices dipped on Friday after a brief rally, though they remain on track for a second consecutive weekly gain.
Investors are closely monitoring the aftermath of Hurricane Milton on U.S. fuel demand, while geopolitical risks surrounding potential Israeli strikes on Iranian oil facilities continue to drive volatility.
Brent crude futures fell by 1.2% to $78.46 per barrel, while U.S. West Texas Intermediate (WTI) dropped 1.1% to $74.99. Despite the day’s declines, both benchmarks are poised for weekly gains, driven by concerns over potential supply disruptions in the Middle East.
“Oil prices have extended gains week-on-week, with geopolitical risks fueling the rebound,” said Yeap Jun Rong, a market strategist at IG.
However, the recent rally has been tempered by high crude inventories and a gradual U.S. Federal Reserve rate adjustment, he noted.
Hurricane Milton’s destructive path across Florida, which left millions without power and killed at least 10 people, could slow fuel demand in the U.S., the world’s largest oil producer and consumer.
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“Investors are evaluating how hurricane damage might impact the U.S. economy and fuel demand,” said Hiroyuki Kikukawa, president of NS Trading.
Middle East tensions remain a key driver of market sentiment. Iran’s missile attacks on Israel earlier this month have raised fears of retaliation against Iranian oil facilities.
Israeli Defense Minister Yoav Gallant hinted at a potential strike, calling any future action “lethal, precise, and surprising.”
Investors remain cautious as Gulf states lobby the U.S. to prevent Israel from targeting Iranian oil, fearing repercussions on their own oil infrastructure.
Libya’s National Oil Corporation also announced the restoration of production to pre-crisis levels, reaching 1.22 million barrels per day, alleviating some supply concerns.
Outlook
Oil markets are likely to hover near their 200-day moving averages, with Brent at $81.68 per barrel and WTI at $77.36.
However, geopolitical risks, especially in the Middle East, and U.S. demand uncertainties due to hurricane damage, will continue to influence short-term price movements.
