Crude prices rose above $78 a barrel Monday in Asia as Iran staged five days of war games, boosting tensions in the oil-rich region.
Benchmark crude for January delivery was up 78 cents to $78.25 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 26 cents to settle at $77.20 on Friday.
Iran on Sunday began large-scale air defense war games aimed at protecting its nuclear facilities from attack as an air force commander boasted the country could deter any military strike by Israel, state television reported.
It said the five-day drill will cover an area a third of the size of Iran and spread across the central, western and southern parts of the country.
Analysts said the military exercises boosted tensions in the Middle East, but they didn’t expect supplies to be affected.
“Given the trading range we’ve been in, some investors are going to view $77 as a possible buying opportunity and the Iranian war games gives an excuse to buy,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
Oil has traded between $76 and $82 for more than a month amid concerns a sluggish global economy may not justify the price surge from $32 in December.
This week investors will also be mulling data on U.S. home sales and prices, consumer confidence, initial claims for jobless benefits and revised third quarter gross domestic product figures.
Friday marks the start of the holiday shopping season with the day after Thanksgiving traditionally considered a key barometer of consumer spending.
In other Nymex trading, heating oil rose 2.01 cents to $2.00 a gallon. Gasoline for December delivery gained 1.72 cents to $2.00 a gallon. Natural gas for December delivery jumped 9.1 cents to $4.52 per 1,000 cubic feet.
In London, Brent crude for January delivery rose 76 cents to $77.96 on the ICE Futures exchange.