Brent crude futures were up $1.26, or 1.8%, at $73.03 a barrel around 11:15 a.m. ET (1315 GMT). Brent, the international benchmark for oil prices, is heading for its biggest weekly rise in about three months.
U.S. West Texas Intermediate crude futures rose $1.23, or 2%, to $63.25 per barrel.
Oil was drawing support from the risk of conflict in the Middle East, with helicopters carrying U.S. staff from the U.S. embassy in Baghdad on Wednesday out of apparent concern over perceived threats from Iran.
Despite continuing trade tensions between the United States and China, which have weighed on the demand outlook, the oil market is marked by tight supply.
“There is … more supply at risk to a new U.S. war in the Middle East than demand at risk to the continuation of the trade war with China,” Petromatrix analyst Olivier Jakob said in a note.
An end this month to U.S. waivers that allowed some countries to buy Iranian oil after the reimposition of U.S. sanctions has prompted Tehran to relax restrictions on its nuclear program and threaten action that could breach a 2015 nuclear deal.
An attack on four oil tankers in the Gulf on Sunday, for which no one has claimed responsibility, and Saudi Arabia’s announcement that armed drones hit two of its oil pumping stations, have compounded concerns have stoked supply-side fears.
Asian shippers and refiners have put ships heading to the Middle East on alert and are expecting a possible rise in marine insurance premiums after the attacks.
Japanese Prime Minister Shinzo Abe told Iran’s Foreign Minister Mohammad Javid Zarif he was concerned the situation in the Middle East “is becoming very tense.”
A rise in U.S. crude oil inventories to their highest since 2017 helped to cap prices, though government data pointed to a smaller increase than previous industry data. Falling gasoline stocks also provided some price support.
Also keeping prices in check is uncertainty about whether OPEC and other producers will maintain into the second half of the year supply cuts that have boosted prices more than 35% in 2019.
OPEC said on Tuesday that world demand for its oil would be higher than expected this year.
The so-called OPEC+ group of producers, which includes Russia, meets next month to review whether to maintain the pact beyond June.
The United States Oil Fund LP (USO) was trading at $13.20 per share on Thursday afternoon, up $0.23 (+1.77%). Year-to-date, USO has gained 9.91%, versus a 8.65% rise in the benchmark S&P 500 index during the same period.
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