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By Robert Harvey and Enes Tunagur

(Reuters) – Oil prices held steady on Friday, on track for a weekly rise of 5%, as the Ukraine war intensified and Chinese imports were set to increase in November.

futures climbed 33 cents, or 0.44%, to $74.56 a barrel by 1008 GMT. U.S. West Texas Intermediate crude futures rose 27 cents, or 0.39%, to $70.37 per barrel.

Both contracts are set for gains of 5% this week, the strongest weekly rise since late September, as Moscow steps up its Ukraine offensive after Britain and the United States allowed Kyiv to strike Russia with their weapons.

Putin said on Thursday Russia had fired a ballistic missile at Ukraine and warned of a global conflict, raising the risk of oil supply disruption by one of the world’s largest producers.

Ukraine has used drones to target Russian oil infrastructure, for instance in June, when it used long-range attack drones to strike four Russian refineries.

“What the market fears is accidental destruction in any part of oil, gas and refining that not only causes long-term damage but accelerates a war spiral,” said PVM analyst John Evans.

The world’s top crude importer, China, announced policy measures on Thursday to boost trade, including support for energy product imports, amid worries over U.S. President-elect Donald Trump’s threats to impose tariffs.

China’s imports are set to rebound in November after sharp price cuts boosted demand for Iraqi and Saudi oil, offsetting a drop in Iranian supply, according to analysts, traders and ship tracking data.

Oil prices briefly dipped after data showed euro zone business activity took a surprisingly sharp turn for the worse this month as the bloc’s dominant services industry contracted and manufacturing sank deeper into recession.

Goldman Sachs said in a note that it expects Brent to stay in a $70 to $85 range, but added that prices could reach the top end of that if Iranian output is impacted by Trump’s possible tightening of sanctions.

Investing.com– Oil prices rose in Asian trade on Thursday, buoyed by fears of supply disruptions stemming from worsening tensions in the Russia-Ukraine war, although a build in U.S. inventories limited overall gains.

Prices advanced this week as the use of long-range U.S. weapons by Ukraine against Russia ramped up tensions between the two countries, sparking concerns that oil supplies from Moscow could be disrupted.

Oil also benefited from some bargain buying after dropping to more than one-month lows last week. Still, overall gains were limited by concerns over slowing demand, especially as U.S. inventories grew more than expected.

expiring in January rose 0.4% to $73.07 a barrel, while rose 0.4% to $68.79 a barrel by 22:04 ET (03:04 GMT).

Russia-Ukraine tensions underpin oil

Rising tensions between Russia and Ukraine were a key point of support for oil markets, especially after the U.S. authorized Kyiv to use long-range missiles against Russia. 

Moscow responded to this by lowering its threshold for nuclear retaliation, and warned of a dire escalation in the war.

Ukraine on Wednesday fired a fresh volley of Western-made missiles into Russia, potentially drawing more severe retaliation from Moscow. A key point of anxiety for oil markets is Ukraine’s continued targeting of Russia’s energy infrastructure, which could potentially disrupt oil supplies.

US inventories grow more than expected, gasoline stockpiles rise 

Data from the U.S. Energy Information Administration showed on Wednesday that U.S. grew 0.5 million barrels in the week to November 15, more than expectations for a build of 0.4 mb.

The build, while minimal, was a third straight week of builds.

More worrying for oil markets was a nearly 2.1 mb build in , which spurred some concerns that U.S. fuel demand was cooling as the winter season approached.

Oil prices remained skittish on the prospect of increased supply and softening demand in the coming year, which some analysts expect to cause a supply glut. 

Reuters reported that the Organization of Petroleum Exporting Countries and allies (OPEC+) was planning to further postpone increases in oil production when it meets on December 1.