Oil up with threat of intense warfare in Mideast, weaker dollar

By Zeynep Beyza Kilic

Concern over ongoing conflict in the Middle East despite international call for a cease-fire and weaker US dollar boosted oil prices on Friday.

The international oil benchmark of Brent crude increased 0.2% to $72.79 per barrel at 09.53 a.m. local time (0653 GMT), up from the previous session's close of $72.65.

The US benchmark West Texas Intermediate also rose by 0.14% to $68.98 per barrel, compared to $68.88 at the prior session's close.

The cease-fire agreement reached between Israel and Lebanon came into force on early Wednesday. Experts predicted that the cease-fire agreement could pressure Israel to end its attack on Gaza.

However, the latest statements made by Israeli Prime Minister Benjamin Netanyahu dampened hopes of reaching lasting peace in the region.

Speaking to Israeli Channel 12, Prime Minister Netanyahu said that he would not accept an agreement that would end the attack on Gaza, but they could "pause" the attacks for a prisoner exchange.

Arguing that the conditions in Lebanon are different from those in Gaza, Netanyahu said that Israel is trying to "eliminate" Hamas but prevent Hezbollah from rearming.

Concerns that the fight between Israel and Lebanon could turn to "intense warfare" if Hezbollah violates the cease-fire agreement, also help prices increase.

Netanyahu said that the Israeli army has been instructed to prepare for a violent war in case of a serious violation of the agreement.

The weakening of the US dollar against other currencies aided the rise in oil prices. The US dollar index, which measures the US dollar's value against other currencies, fell 0.44% to 105.674. The weak dollar is expected to enhance demand by making oil cheaper for those who use foreign currencies.

Meanwhile, market players expect that there will be no new trade war between China and the US, the world's largest oil consuming countries.

Despite the high tariffs planned by the newly elected US President Donald Trump, news reports claim that China may prefer to negotiate instead of escalating tensions.

Also, the government in China, the world's largest oil importing country, is expected to continue implementing steps to support the economy next month in order to reduce the impact of possible tariffs.