The conflict in the Middle East continued to push oil prices higher on Friday morning, putting crude on track for its biggest weekly rise in four years.
Brent crude (BZ=F) futures were up 0.5% at $85.81 per barrel at the time of writing, while West Texas Intermediate futures (CL=F) rose by the same margin to $81.41 a barrel.
Oil prices resumed their advance after slipping earlier in the session, following reports that the Trump administration was potentially considering intervening to help deal with the recent surge in prices.
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Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Potential measures under discussion include releasing crude from US emergency reserves, granting waivers on fuel-blending requirements, and even allowing the US Treasury to trade oil futures.”
The US issued a 30-day waiver for Indian purchases of Russian oil on Thursday evening.
However, Britzman highlighted that oil has still jumped nearly 20% this week, putting it on course for its biggest weekly increase since February 2022. The outbreak of conflict between the US, Israel and Iran has resulted in disruption to oil and gas flows through the crucial Strait of Hormuz shipping route, pushing prices higher.
“Higher prices tend to feed through to consumers almost immediately via rising petrol costs, which in turn risks reigniting inflation pressures just as central banks were hoping for some relief,” Britzman said.
Geopolitical turmoil has also buoyed demand for gold as a so-called safe haven asset, driving prices higher on Friday morning.
Gold futures (GC=F) were up nearly 1% at $5,128.30 per ounce at the time of writing, while spot gold added 0.6% at $5,111.18 an ounce.
Despite Friday’s rise, Hargreaves Lansdown’s Britzman pointed out gold prices were still on track for their first weekly decline in five weeks, which he said “may come as a surprise given the ongoing geopolitical tensions”.
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“While the Middle East conflict has boosted demand for safe-haven assets, the resulting surge in oil prices has stoked fresh inflation concerns, prompting traders to dial back expectations for rate cuts,” he said.
“Markets are now pricing in just one US cut this year, down from two earlier in the week, after surging oil prices and a run of solid US data pointed to continued economic resilience.”
The prospect of interest rates staying elevated for longer tends to weigh on gold prices, as it dents the appeal of holding the precious metal, as a non-yielding asset.