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Oil prices head back up on Middle East jitters

Friday,   12-Apr-2024   08:19 AM (IST)

Oil prices rose in early trade on Friday on heightened tensions in the Middle East, where Iran has promised to retaliate for a suspected Israeli air strike on its embassy in Syria, which could risk disruptions to supply from the oil producing region. Brent crude futures climbed 34 cents, or 0.38%, to $90.08 a barrel, while U.S. West Texas Intermediate crude futures rose 44 cents, or 0.51%, to $85.45, at 0033 GMT. The gains erased some losses from the previous session, which was dominated by worries about stubborn U.S. inflation that dampened hopes for an interest rate cut as early as June. Suspected Israeli warplanes bombed Iran's embassy in Damascus in an April 1 strike 1 for which Iran has vowed revenge, ratcheting up tension in a region already strained by the Gaza war. The U.S. expects an attack by Iran against Israel but one that would not be big enough to draw Washington into war, according to a U.S. official. Iranian sources said that Tehran has signalled a response aimed at avoiding major escalation. Israel is keeping up its war in Gaza but is also preparing for scenarios in other areas, Prime Minister Benjamin Netanyahu said on Thursday. In Europe, where the labor market has begun to soften and growth is stagnating, central bankers left the policy rate unchanged on Thursday but signalled they remain on track to cut rates as soon as June.  However in the U.S., Federal Reserve officials signalled on Thursday no rush to cut interest rates, as sticky U.S. inflation remains a concern.