Oil jumped after a report that Iran could be preparing to attack Israel from Iraqi territory in the coming days, jolting the market's attention back to a potential flare-up of Middle East hostilities.

Brent surged as much as 2% to trade above $74 a barrel on Friday, while West Texas Intermediate rallied toward $71. Iran is planning a strike through militias it backs in Iraq, which is expected to be carried out with drones and ballistic missiles, Axios reported, citing two Israeli sources it didn't name. 

Oil tumbled at the start of the week after a limited Israeli attack on Iran in response to an Oct. 1 missile barrage, which led to a war premium quickly unwinding and focus shifting to weak fundamentals. However, Standard Chartered Plc warned that the market had "relaxed too quickly."

Developments during the week were pointing to a potential easing of hostilities in the Middle East, with Israel also considering a US-led proposal to end the conflict in Lebanon. Still, the Israeli military said the nation would hit back "very hard" should Iran attack again.

"The market can't ignore signs of resurgent Mideast tensions, but it is amply clear by now that neither Israel nor Iran would willingly do anything that might risk a wider war," said Vandana Hari, founder of Vanda Insights in Singapore.

The oil market has a number of key events on the horizon that could impact prices, from the US election and a meeting of China's top legislative body next week, to a looming decision from OPEC+ to start gradually reviving production from December. 

Brent for January settlement surged 1.7% to $74.04 a barrel at 8:48 a.m. in Singapore.

WTI for December delivery advanced 1.8% to $70.51 a barrel.

Source : Bloomberg