Investing.com -- Oil prices climbed sharply Friday, on concerns of a widening of the Israel-Hamas conflict, potentially impacting supply in this oil-rich region.
By 09:30 ET (13.30 GMT), the U.S. crude futures traded 1% higher at $84.03 a barrel, while the Brent contract climbed 0.8% to $88.66 a barrel.
Crude rises after U.S. airstrikes
The crude benchmarks rose Friday after the Pentagon confirmed that the U.S. had launched strikes on two facilities in eastern Syria that it claimed were used by Iran's Islamic Revolutionary Guard Corps.
The U.S. justified the attacks by saying they were in response to recent attacks on U.S. troops in Iraq and Syria, but Iranian Foreign Minister Hossein Amirabdollahian said in the United Nations that the United States will "not be spared from this fire".
Meanwhile, Israeli forces carried out an overnight raid on northern Gaza, while Prime Minister Benjamin Netanyahu reiterated his commitment to a bigger ground assault on the region.
This escalation has raised fears of a potential disruption of not only exports from major crude producer and Hamas-backer Iran but also shipments from Saudi Arabia, the world's largest oil exporter.
Weekly losses loom
However, the crude benchmarks are on course for heavy losses this week, their first weekly loss in three, with the Brent contract currently down 3.2% and the Nymex contract 4.9% lower.
Traders have struggled to gauge just how much the war would disrupt oil supplies, given that crude shipments from the Middle East were little changed in the first 20 days of the conflict.
Additionally, worries are growing about the future oil demand from Europe, a major crude consumer, after the European Central Bank left interest rates unchanged on Thursday, snapping an unprecedented streak of 10 consecutive rate hikes.
"The euro area economy remains weak," ECB President Christine Lagarde said at a news conference after the policy decision.
“The economy remains a downside factor for oil prices, with traders clearly concerned about growth prospects amid high-interest rates. Europe is already struggling under the pressure,” said Craig Erlam, an analyst at OANDA.
Dollar strength weighs on crude ahead of Fed meeting
Strength in the dollar, before next week’s Federal Reserve meeting, also put some pressure on oil markets. While the central bank is widely expected to keep rates on hold, Fed officials have also signaled higher-for-longer rates, which could potentially stymie crude demand in the coming year.
Gross domestic product data released on Thursday showed that the U.S. economy grew far more than expected in the third quarter, while the core PCE price index, the Fed’s favorite gauge of inflation, rose 0.3% on the month in September, after increasing 0.1% in the prior month.
The week finishes with the weekly Baker Hughes oil rigs count and CFTC positioning data, as usual.
(Ambar Warrick contributed to this item.)