Oil posted a second weekly gain as developments in the Middle East raised concerns that the conflict may spread, though U.S. efforts to delay Israel’s invasion of Gaza caused prices to edge down on Friday. 

After initially resisting a delay in what officials said would be a massive military operation to eradicate Hamas, Israel agreed under U.S. pressure to hold off on its attack, Bloomberg reported, citing people familiar with the effort.

Publicly, Israel has shifted its tone on plans for the operation in recent days, suggesting a more limited approach that may reduce civilian casualties. President Joe Biden said Friday that trucks carrying aid supplies will cross into Gaza within 24 to 48 hours.

The developments brought prices down on Friday after a spate of incidents that traders saw raising the potential for the war to draw in Iran boosted futures earlier in the day. Israel’s military said it struck Hamas targets in Gaza overnight and responded to fire from Lebanon by hitting Hezbollah assets. The U.S. is seeing stepped-up drone attacks in Iraq and Syria, and an American destroyer intercepted cruise missiles fired toward Israel by Houthi rebels in Yemen. 

West Texas Intermediate’s more-active December contract fell to settle near US$88 a barrel on Friday, while still posting a second straight weekly gain.

“Underlying fundamentals are playing second fiddle to the tragic events in Israel and Gaza,” said Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd.

The war has also led to a frenzy of activity in the options market as traders position around the risk of further surges in crude. Trading of bullish calls has outpaced that of bearish puts every day for almost a month. 

Prices:

• WTI for November delivery, which expires Friday, fell 62 cents to settle at $88.75 a barrel in New York. The more active December contract settled at $88.08 a barrel.
• Brent for December settlement slid 22 cents to settle at $92.16 a barrel.

Still, even a spread in the conflict might not lead to sustained higher prices, JPMorgan Chase & Co. analysts including Natasha Kaneva said in a report. Geopolitical risks have pushed prices about $7 higher than they would otherwise be, they said.

Away from the conflict, the U.S. Energy Department said on Thursday that it aimed to buy as much as six million barrels for the Strategic Petroleum Reserve as it continues to replenish the stockpile after a record withdrawal.