Crude oil prices jumped again on Friday, bringing the weekly gain to around 8%. Oil has been pushed higher due to the intensifying conflict in the Middle East following Iran's response to Israeli attacks.
Energy stocks have surged alongside the rally in oil prices, with the S&P 500 energy sector up 7%. This marks the sector’s best week since October 2022.
Oil prices have staged a comeback, driven by escalating geopolitical tensions in the region. The market is on edge over the possibility of an Israeli counterstrike on Iranian oil facilities. Iran, a key player, produces about 3 million barrels daily, with around half of that figure exported.
However, it's worth noting that the global oil market is currently well-stocked. Heavyweights like Saudi Arabia have the capacity to ramp up production if Iranian output takes a hit, so don’t hold your breath for a production surge.
American output is running more than 6% ahead of 2023.
Some OPEC+ members are already overproducing and struggling to adhere to the cartel's quotas. Last week’s attacks in Israel and then Iran saw crude oil prices surge nearly 10%, with Brent crude and West Texas Intermediate (WTI) trading at $78.40 and $78.10, respectively.
