By Scott DiSavino
NEW YORK (Reuters) -Oil prices rose slightly on Friday on reports that Iran is preparing a retaliatory attack from Iraq on Israel in coming days, but record U.S. output weighed on prices.
futures rose 29 cents, or 0.4%, to settle at $73.10 a barrel. U.S. West Texas Intermediate (WTI) crude gained 23 cents, or 0.3%, to settle at $69.49. At their session highs, both benchmarks rose more than $2 per barrel.
Brent reported a weekly decline of around 4%, while WTI fell around 3%.
On Thursday, US news website Axios reported that Israeli intelligence suggests Iran is preparing to attack Israel from Iraq within days, citing two unidentified Israeli sources.
“Any additional response from Iran could remain restrained, similar to Israel’s limited attack last weekend, and thus primarily intended as a show of strength rather than an invitation to open war,” said SEB Research analyst Ole Hvalbye.
Iran and Israel have been involved in a series of tit-for-tat attacks within the broader Middle East warfare sparked by the fighting in Gaza. Previous Iranian airstrikes on Israel on October 1 and in April were largely repulsed, with only minor damage.
Iran is a member of the Organization of the Petroleum Exporting Countries (OPEC) and produced about 4 million barrels of oil per day (bpd) in 2023, according to data from the US Energy Information Administration.
Iran was on track to export about 1.5 million barrels per day in 2024, up from an estimated 1.4 million barrels per day in 2023, according to analysts and U.S. government reports.
Iran supports several groups currently fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen.
A US official asked Lebanon to declare a unilateral ceasefire with Israel to revive stalled talks to end hostilities between Israel and Hezbollah, a top Lebanese political figure said source and a senior diplomat – a claim denied by both sides.
Oil prices were also supported by expectations that OPEC+ could delay its planned oil production increase in December by a month or more on concerns about weak oil demand and rising supply. A decision could be made as soon as next week.
OPEC+ includes OPEC and its allies such as Russia and Kazakhstan.
While OPEC+ is cutting production, the American oil giant is ExxonMobil (NYSE:) said global production hit a record high Chevron (NYSE:) said U.S. manufacturing hit a record high.
The US Energy Information Administration (EIA) said this week that drillers are extracting a record 13.5 million barrels of oil per day. EIA also said this week that production reached a record 13.4 million barrels per day in August, and said annual production was on track to hit a record 13.2 million barrels per day in 2024 and 13.5 million barrels per day by 2025.
Employment growth in the US is stagnating
US job growth came to a virtual standstill in October as labor strikes in the aerospace industry put pressure on manufacturing employment, while hurricanes affected the payroll survey response, making it difficult to get a clear picture of the labor market in the run-up to next week’s presidential elections.
Polls show the US presidential race as a battle between Democratic Vice President Kamala Harris or Republican former President Donald Trump as the country’s next president.
Economists expect the US Federal Reserve to cut interest rates by 25 basis points next Thursday.
After aggressively raising rates in 2022 and 2023 to curb the rise in inflation, the Fed began cutting rates in September.
Lower interest rates lower financing costs, which can stimulate economic growth and oil demand.
