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Oil prices settle 2% higher, lifted by rising Middle East tensions

OPEC+ seen weighing decision on extending voluntary production cuts Crude-oil futures rose Friday, settling higher for the week, after a strike by Israeli forces a day earlier was said to have killed more than 100 Palestinians waiting for aid in Gaza, raising tensions in the oil-rich Middle East.

Traders also waited to hear any news on whether major oil producers will extend voluntary production cuts, which expire at the end of March.

Price moves West Texas Intermediate crude CL00, +2.10% for April delivery CL.1, +2.10% CLJ24, +2.10% rose $1.71, or 2.2%, to settle at $79.97 a barrel on the New York Mercantile Exchange. Prices based on the front month ended nearly 4.6% higher for the week after finishing 3.2% higher for the month of February, according to Dow Jones Market Data. May Brent crude BRN00, -0.07% BRNK24, -0.07%, the global benchmark, climbed $1.64, or 2%, at $83.55 a barrel on ICE Futures Europe, with the contract ending 3.4% higher for the week. April gasoline RBJ24, +1.33% added 1.3% to $2.61 a gallon, up 4.2% for the week, while April heating oil HOJ24, +1.91% tacked on nearly 2.1% to $2.70 a gallon, gaining 2.4% for the week. Natural gas for April delivery NGJ24, -1.13% settled at $1.84 per million British thermal units, down 1.3% Friday. Prices saw an 8% gain on the week, after posting a February loss of over 11%. Market drivers “Geopolitical tensions have become an increasingly bullish influence on the market as we move further into 2024,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.

Gaza health officials said scores of Palestinian civilians were killed Thursday after Israeli troops opened fire near an aid convoy, the Wall Street Journal reported.

President Joe Biden said the deaths would complicate talks around a cease-fire between Israel and Hamas, according to news reports. Biden had said earlier this week that he had seen prospects for an agreement as early as Monday.

Read: War wasn’t enough to budge oil prices. Here’s what could spark a big move.

Investors are also awaiting a decision by members of OPEC+ — made up of the Organization of the Petroleum Exporting Countries and its allies — on whether to extend voluntary production cuts.

“Sticking to the voluntary production cuts until the end of the year would be a strong signal and should therefore be seen as price-positive” because the oil market would remain tight until the year’s end, Carsten Fritsch, commodity strategist at Commerzbank, said in a note. An extension only into the second quarter is “likely to be priced in and should therefore not move prices significantly.”

See: Gas prices are rising again. Here’s why you shouldn’t worry, one analyst says.

OPEC+ countries were considering an extension of the cuts, which amount to 2.2 million barrels a day, into the second quarter, Reuters reported earlier this week, with some officials pointing to the prospect of an extension to the year’s end. The report said a decision on an extension is expected in the first week of March.