Oil prices jump over 2% as Iran threatens to review nuclear doctrine By– Oil prices rose sharply in Asian trade on Friday as tensions in the Middle East came back into focus after reports showed Iran warning it could review its stance on nuclear weapons if Israel attacked Tehran’s nuclear sites. 

Reports on Thursday cited comments from senior Iranian Revolutionary Guard officials that Tehran could reconsider developing a nuclear weapon if Israel attacked the country’s nuclear sites, which have so far been used only for peaceful, power-generating purposes. 

Any such moves by Iran could mark a severe escalation in the Middle Eastern conflict, and saw traders move to bringing back a heavy risk premium on oil prices.

expiring in June surged 2.5% to $89.09 a barrel, while expiring in May rose 2.6% to $84.89 a barrel by 21:30 ET (01:30 GMT). 

Both contracts reversed a bulk of their losses for the week, but were still set to end the week mildly negative. 

Middle East tensions back in focus after Iran comments 

Iran’s comments put concerns over an escalation in the Middle East squarely back into focus. Traders fears that a bigger conflict in the oil-rich region could stymie global crude supplies.

Tensions over a broader Middle East conflict were amped up after Iran launched a missile and drone strike against Israel last week, in retaliation over an alleged Israeli strike on an embassy in Damascus. 

Iran said it was done attacking Israel, and warned the country against any retaliatory strikes- with Thursday’s comments reiterating the message. But Thursday’s comments also marked the first time Iran had flagged a potential nuclear threat.

UN reports recently showed Iran was enriching uranium up to 60%, which was more than levels required for commercial power generation. But it was also below the 90% enrichment level required for an atomic bomb. 

Israel said it will strike back against Iran over last week’s attacks, but so far has made no such moves. This lack of immediate escalation had seen traders price out a risk premium from oil prices this week, which also kept crude on track for weekly losses.

Oil still set for weekly losses 

But despite Friday’s gains, oil prices were still set to fall over the past seven days.

A major point of pressure on oil prices this week was a stronger , following strong U.S. economic data and warnings from a slew of Fed officials that interest rates will remain higher for longer.

A stronger dollar pressures crude demand by adding a currency-related premium for international buyers. 

The prospect of higher-for-longer rates factors into fears that global economic growth will be stymied by tight policy, which also bodes poorly for oil demand. 

Traders were seen largely pricing out expectations for a June rate cut by the Fed. 

Still, bigger losses in crude were limited by the U.S. resuming its oil sanctions against Venezuela, citing a lack of progress towards holding fair elections in the country. 

The U.S. and its allies also introduced more sanctions on Iran’s oil industry this week.

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