Oil Pares Gain as Biden Discourages Attack on Iran’s Oil Fields

Oil pared gains after President Joe Biden sought to discourage Israel from attacking Iran’s oil fields, Bloomberg reported.

West Texas Intermediate rose 0.9% to settle above $74 a barrel on Friday, after earlier surging as much as 2.5%. The advance faded after Biden told reporters at the White House, regarding Israeli’s potential retaliation against Iran for its recent missile strike, “If I were in their shoes I would think of other alternatives than attacking oil fields.”

Crude still soared 9.1% this week — the biggest weekly advance since March 2023 — as the escalation of hostilities raises the possibility of disruption to Middle East oil supplies.

The Middle East accounts for about a third of the world’s crude supply. Iran has been pumping about 3.3 million barrels a day in recent months, making it the No. 3 producer in the Organization of Petroleum Exporting Countries.

West Texas Intermediate calls, which profit from price gains, were at the widest premium to the opposite puts in 2 1/2 years as of Thursday’s close. Implied volatility has also spiked.

Meanwhile, commodity trading advisers, which largely rely on trend-following algorithms, flipped to a net long position in Brent by Friday, compared with being net short by about 55% on Tuesday, according to data from Bridgeton Research Group.