Oil prices rallied towards $65 per barrel on fears of a U.S. military attack on Iran that would disrupt flows from the Middle East, which provides more than 20 percent of the world’s oil output.
Brent crude was up 42 cents, or 0.66 percent, at $64.87 a barrel by 0850 GMT. The global benchmark jumped 4.3 percent on Thursday and was up around five percent for the week, in its first weekly gain in five weeks.
U.S. West Texas Intermediate crude was up 21 cents, or 0.38 percent, at $57.28 a barrel. The US benchmark surged 5.4 percent on Thursday and was on track for a 9 percent increase this week.
Tensions have been on the rise because US sanctions on Iran have severely reduced oil exports from OPEC’s third largest producer and Washington has blamed Tehran, which denies any role, for a series of attacks on oil tankers in the Gulf.
“There is no doubt that a severe disruption to the transit of oil through this vulnerable route would be extremely serious,” said consultancy FGE Energy in a note.
The demand-side outlook has also improved, said Jefferies with an appetite for risk assets rising after the European and the US central banks signalled possible rate cuts this week.
A weaker greenback tends to support oil prices because crude is usually priced in dollars.