Oil was steady as talks over hostage releases were said to potentially delay a ground invasion of Gaza by Israel. 

Global benchmark Brent was little changed near US$92 a barrel. Israel warned that Iran-backed Hezbollah risked dragging neighboring Lebanon into the war even as it continued fierce air raids on Hamas in Gaza. More than 60,000 people in Israel have been evacuated along the border with Lebanon.

Brent has advanced about 8 per cent since the Oct. 7 attack on Israel by Hamas, amid concerns the conflict will drag in other nations including Lebanon, Iran and potentially the U.S. The Middle East supplies around a third of the world’s crude and among the market’s main risks are Washington ramping up compliance checks on sanctioned Iranian oil and Tehran disrupting key shipping routes.

In a sign of how traders have grown wary about the risk of a price spike, speculators hiked bullish bets on the global Brent benchmark by the most since 2016 last week, while the most call options traded in a week on record. 

“There is significant asymmetric upside to near-term oil prices in the event that the Israel-Hamas war escalates into a wider-spread regional conflict,” RBC analysts including Michael Tran and Helima Croft wrote in a report. “Though it is important to recognize, and the bulls will admit, as we have witnessed over recent weeks the price path to much higher levels could still be very non-linear.”

A widely expected ground offensive by Israel into the Gaza Strip was delayed in order to buy time for efforts to secure the release of hostages held by Hamas, which is designated a terrorist group by the U.S. and the European Union. An American mother and her daughter were released on Friday through the mediation of Qatar.

Prices:

• Brent for December settlement rose 0.18 per cent to US$92.33 a barrel at 10:00 a.m. in London.
• WTI for December delivery was little changed at US$88.10 a barrel.

The Middle East war-risk premium may be partially offset by the prospect of more Venezuelan crude exports after the U.S. last week took the first steps in pulling back on its sanctions policy. The likes of Chevron Corp., Rosneft PJSC and Repsol SA are poised to benefit from the reopening.