Oil prices experienced a rise on Friday, marking their largest weekly gains in over a year, driven by the escalating threat of a regional war in the Middle East. However, the gains were tempered after US President Joe Biden advised Israel against targeting Iranian oil facilities.

Brent crude futures increased by 43 cents, or 0.6 per cent, settling at $78.05 per barrel, while US West Texas Intermediate crude futures rose by 67 cents, or 0.9 per cent, closing at $74.38 per barrel.

Israel vowed to retaliate against Iran following a missile attack launched at Israel, which occurred after Israel had assassinated the leader of Iran-backed Hezbollah a week prior. These developments prompted oil analysts to caution their clients about the potential consequences of a wider conflict in the Middle East.

During the trading session, oil prices surged nearly 2 per cent but experienced a sharp decline after Biden indicated that, if he were in Israel's position, he would contemplate alternatives to striking Iranian oil fields. Oil benchmarks had soared over 5 per cent after Biden confirmed that the US was engaged in discussions with Israel regarding support for a strike on Iranian energy infrastructure.

In terms of weekly performance, Brent crude saw an increase of over 8 per cent, the highest weekly gain since January 2023, while WTI recorded a 9.1 per cent rise week-over-week, the most significant increase since March 2023.