Investing.com — Oil prices settled higher Friday, wrapping up a positive  week as persistent concerns over the Middle East conflict kept a risk premium in play. 

At 2:30 p.m. ET (1830 GMT), while climbed 2.2% to $71.77 a barrel, rose 2.1% to $75.96 a barrel.

Oil set for weekly gains

The crude benchmarks were trading over 2% higher this week, recovering some measure of the steep losses logged earlier in October. 

A bigger recovery in crude was held back by data showing a bigger-than-expected build in , indicating less tight supplies in the world’s biggest fuel consumer. 

A strong also weighed on crude as continued concerns over a slower pace of interest rate cuts by the Federal Reserve kept traders biased towards the greenback. 

Oil prices were trading off weekly highs as speculation over the Middle East conflict sparked some volatility in markets.

While Israel presented a harsh rhetoric against Iran this week, U.S. officials kept up their efforts to broker a ceasefire, especially before the 2024 presidential elections, which could alter future U.S. policy in the Middle East. 

Israel has vowed to attack Iran over an early-October strike, which kept traders on edge over an escalation in the conflict that could potentially disrupt supplies from the Middle East.

The number of oil rigs operating in the U.S. fell by 2 to 480, according to data Friday from energy services firm Baker Hughes.  

China stimulus in focus 

Recent weakness in oil markets was driven chiefly by concerns over slowing demand in top importer China, as a swathe of stimulus measures from the country spurred limited optimism.

Traders were underwhelmed by a lack of details from Beijing on the timing and scale of its planned measures, especially on the fiscal front. 

The Standing Committee of the National People’s Congress is now set to meet in November, where policymakers are likely to decide on plans for more fiscal spending. The committee was initially expected to meet in late October, but was delayed. 

“The market continues to be caught between supply risks related to ongoing Middle East tension and lingering demand concerns. The outlook for a comfortable 2025 oil balance will also be playing a role in price action,” said analysts at ING, in a note.

(Peter Nurse, Ambar Warrick contributed to this article.) 

By Georgina McCartney

NEW YORK (Reuters) -A top economist for the state of New Mexico, the second-largest oil-producer in the U.S., this week released a study on potential drilling restrictions that could hit up to 5.4% of its future crude output and result in billions of dollars in lost revenue.

The study evaluated setback proposals from the 2024 legislative session, which would restrict how close operators can drill to certain structures and environmental areas. They are intended to protect the public from oil and gas pollution.

“The topic is complicated and required more time to evaluate and analyze than what was provided during the session. This presentation was to provide the committee with further analysis,” said Ismael Torres, chief economist at New Mexico’s Legislative Finance Committee.

“It is too early to know what, if any, setbacks will be proposed in the upcoming session,” he added.

The setbacks evaluated in the report would take effect in 2026 and would affect 15% of new wells in the state, of which about a third would be lost, according to Torres.

That would amount to roughly 12.5 million barrels of oil output lost in the first year, and around 35 million barrels by the early 2030s.  

Production value lost would peak at around $4.5 billion annually by 2034. 

New Mexico houses portions of the prolific Permian shale field, which also crosses into Texas. The state was producing some 2.04 million barrels per day in July, according to the most recent data from the U.S. Energy Information Administration.       

The report estimates more than half of the affected wells are on private land, a quarter of which are in Lea County, one of the fastest-growing oil-producing counties in the United States. 

“A statewide setback would not accomplish increased mitigation of human health effects from oil and gas production, but it would be a detriment to the continued development of oil and gas resources and, ultimately, the State of New Mexico,” said Missi Currier, chief executive officer of the New Mexico Oil & Gas Association industry group. 

The report was presented to the state’s Legislative Finance Committee on Tuesday.

The setbacks evaluated in the report would prevent operators from drilling within 2,250 feet (686 m) of most residential, education, health or correctional institutions, and halt drilling 650 feet from streams, lakes, ponds, wetlands, or irrigation infrastructure. 

It would limit activity within 300 feet of all other surface water. 

“The cost to human health and our natural resources far outweigh whatever revenue would be lost to the state,” said Charlie Barrett, a New Mexico environmental advocate and thermographer at the environmental group Earthworks.

“Setbacks are critical to protecting communities, schools and businesses,” he added.

By Georgina McCartney

HOUSTON (Reuters) -Oil prices settled higher on Friday and gained 4% on the week, with investors taking stock of the ongoing conflict in the Middle East as well as the U.S. election next month.

futures settled up $1.67, or 2.25%, at $76.05 a barrel. U.S. West Texas Intermediate crude settled up $1.59, or 2.27%, to $71.78.

Brent settled 4% up on the week, while WTI settled 3.7% higher on the week.

“Really it seems like the market is bouncing around in a holding pattern till we get an answer to some of these questions on Israel, the war and the election,” said Phil Flynn, senior analyst at Price Futures Group.

“The election is creating uncertainty in a lot of markets and people are pulling in their horns a little bit, not ready to be making big commitments because of the potential for spikes, volatility and uncertainty,” Flynn added.

Investors globally are piling into the U.S. dollar and betting on rising volatility ahead of these next crucial two weeks leading up to the Nov. 5 election in the U.S., as well as an election in Japan, and three major central banks deciding on interest rates and the UK government presenting its new budget.

Both benchmarks have fluctuated this week, rising on Monday and Tuesday before falling on Wednesday and Thursday, largely on expectations of heightened or reduced Middle East risk.

“Geopolitics is the leading force today that we are seeing, otherwise we are just waiting to see what happens with the (U.S.) election, and what direction that will push markets in,” said Tim Snyder, chief economist at Matador Economics.

An Israeli strike killed three journalists in south Lebanon on Friday, Lebanon’s health ministry said, and the UN refugee agency warned that Israeli airstrikes on a border crossing with Syria were hindering refugees trying to flee the war.

U.S. Secretary of State Antony Blinken said there was a sense of urgency in getting to a diplomatic resolution to end the conflict in Lebanon between Israel and Iran-aligned Hezbollah, while calling for the protection of civilians.

U.S. and Israeli officials are set to restart talks for a ceasefire and the release of hostages in Gaza in the coming days.

Investors continue to await Israel’s response to an Iranian missile attack on Oct. 1. A response could involve strikes on Tehran’s oil infrastructure, though media reports last week said Israel would strike military rather than nuclear or oil targets.

Elsewhere, traders are also seeking more clarity on China’s stimulus policies, though analysts do not expect such measures to provide a major boost to oil demand.

Goldman Sachs on Thursday left its oil price forecasts unchanged at between $70 and $85 a barrel for Brent in 2025, expecting the impact from any Chinese stimulus to be modest relative to bigger drivers such as Middle East oil supply.

Bank of America is forecasting Brent crude to average $75 a barrel in 2025 without any rolling back of OPEC+ production cuts into next year, it said in a note on Friday.