Oil prices up 1% on US storm and Israel-Iran fears

Oil prices rose more than 1% on Thursday, underpinned by a spike in fuel demand as a major storm barrelled into Florida, with Middle East supply risks also in focus.

Brent crude futures rose $1.01, or 1.3%, to $77.59 a barrel by 1108 GMT. U.S. West Texas Intermediate (WTI) futures were up $1, or 1.4%, at $74.24.

In the United States, the world's largest oil producer and consumer, Hurricane Milton made landfall in Florida, where about a quarter of fuel stations sold out of gasoline, helping to support crude prices.

Prices spiked this month after Iran launched more than 180 missiles against Israel on Oct. 1, raising the prospect of retaliation against Iranian oil facilities. With Israel yet to respond, crude benchmarks have eased once more and remained relatively flat through the week.

But investors remained wary, given Israeli Defence Minister Yoav Gallant promised that any strike against Iran would be "lethal, precise and surprising".

U.S. President Joe Biden spoke to Israeli Prime Minister Benjamin Netanyahu about Israel's plans concerning Iran, though ANZ analysts said there is growing concern that Israel's allies have little influence on its strategy.

Even with threats to the oil-producing Middle Eastern region in the spotlight, demand concerns continue to underpin the fundamental outlook.

"Without a genuine demand excess or supply shortage, the risk will remain skewed to the downside. Even if the Israeli bellicose rhetoric is embodied in an Israeli assault on Iranian oil infrastructure, the price reaction could be brief, albeit violent," said Tamas Varga at oil broker PVM.

The U.S. Energy Information Administration (EIA) on Tuesday downgraded its demand forecast for 2025 on weakening economic activity in China and North America.

EIA data on Wednesday showed crude inventories last week built more than expected by analysts in a Reuters poll.