Oil Prices Rise on Tensions and Manufacturing Data

Oil prices rose sharply on Friday, recovering some losses from earlier in the week, driven by reports of Iran planning a retaliatory strike on Israel.

As of 08:25 ET (12:25 GMT), U.S. crude futures increased by 2.6% to $71.06 per barrel, while Brent crude gained 2.4%, reaching $74.59 per barrel.

Iran to Strike at Israel?

Iran is reportedly preparing to attack Israel from Iraqi territory soon, according to Axios, citing Israeli intelligence. This potential conflict follows Israel's airstrike against Iran on October 26.
The fear of expanding conflict in the Middle East, which could disrupt crude supplies from this pivotal region, has added a risk premium in the crude market.

Despite the rise, both crude contracts are projected to decline about 2% this week, after dropping over 6% on Monday due to Israel's restrained actions during the weekend, which lowered fears of a broader conflict. The two nations have engaged in a cycle of attacks as tensions in the Middle East escalate amid ongoing fighting in Gaza.

China Manufacturing Activity Grows

Additionally, the crude market was buoyed by news that China’s manufacturing activity rebounded in October, as reported by a private-sector survey. The Caixin/S&P Global manufacturing PMI rose to 50.3 in October from 49.3 in the previous month, outperforming forecasts of 49.7.
This data aligns with Thursday's official survey results indicating manufacturing expansion for the first time since April, driven by stimulus measures introduced in late September aimed at revitalizing the economy of the world’s second-largest economy and largest crude importer.

OPEC+ to Delay Supply Increase?

Oil prices also gained support from expectations that OPEC+ may postpone a planned increase in oil production for December due to concerns regarding softening demand and rising supply. OPEC+, which includes the Organization of the Petroleum Exporting Countries alongside Russia and other allies, is set to increase output by 180,000 barrels per day in December, after delaying the initial increase planned for October due to falling prices.