Oil price records biggest weekly gain in a year

The price of oil recorded its biggest weekly gain in more than a year after markets bet on further escalation of the conflict in the Middle East.
Brent crude, the international benchmark, rose by 0.8 per cent to hit $78.24 in Friday trading, putting total weekly gains at 9 per cent and closing in on the $80 mark last reached at the end of August. Another benchmark, West Texas intermediate, increased by 0.75 per cent to $74.26.
Oil prices have been rising all week as the conflict between Israel and Hezbollah edges closer to full-scale war. Israel and the United States have warned Iran of “severe consequences” after Tehran’s armed forces fired almost 200 ballistic missiles at Israel, the biggest direct attack on its regional adversary to date.
When asked on Thursday whether the US would support retaliatory attacks by Israel on Iranian oil facilities, President Biden said that the two nations were “in discussion of that”.
Iran exported 1.32 million barrels of oil a day last year, according to the Opec cartel.
Israel’s military said it had targeted the leadership of Hezbollah with further airstrikes on Beirut on Friday. A drone attack from Iraq killed two soldiers at an army base in northern Israel, the Israel Defence Forces said.
Shares in Shell rose by 13½p, or 0.5 per cent, to £25.77½ while BP was up 7¾p, or 1.9 per cent, at 416¾p. Both have improved by more than 5 per cent over the week.
Before the Iranian missile attacks on Israel, oil was trading near a two-week low due to weak global demand and the outlook for increased supply outweighing concerns over the conflict.
Opec has agreed to bring back daily output by 180,000 barrels from December, after delaying the unwinding of production cuts by two months.
A Reuters poll of analysts projected that Brent crude would average $81.52 per barrel this year, the lowest forecast since February and down from the $82.86 expected in August.
Both Opec and the International Energy Agency (IEA) cut their forecasts for global oil demand this year, citing slower Chinese demand. Opec said in September that it expected demand to rise by 2.03 million barrels a day this year, down from growth of 2.11 million barrels previously. The IEA lowered its projection to 900,000 barrels a day for this year, from 970,000 barrels a day.
The yield on ten–year UK government bonds has risen to the highest level since July at 4.07 per cent, after the higher oil price raised concerns about inflationary pressures.
The price of gold, considered a safe haven asset, has risen by $2.86 to $2,657.86 a troy ounce, hovering just below a record price of $2,685.
The rise in the oil price has hit several London-listed airlines: shares in Wizz Air fell by 45p, or 3.7 per cent, to £12.74 at the close, while easyJet was trading down 12¾p, or 2.6 per cent, at 493p.