Oil prices edged higher on Friday, on track for a weekly gain of more than 4%, as the Ukraine war escalated, with Russian President Vladimir Putin warning of a global conflict.

Brent crude futures rose 17 cents, or 0.2%, to $74.40 a barrel by 0722 GMT. U.S. West Texas Intermediate crude rose 20 cents, or 0.3%, to $70.30 a barrel.

Both contracts jumped 2% on Thursday and were set to close the week up more than 4%, their strongest performance since late September, as Moscow escalated its attacks on Ukraine after Britain and the United States allowed Kyiv to attack Russia with their weapons.

Putin said on Thursday Russia had fired ballistic missiles into Ukraine and warned of a global conflict, raising the risk of disruptions to oil supplies by one of the world's biggest producers.

Russia said this month it was pumping about 9 million barrels of oil a day, even with output falling following import bans linked to its invasion of Ukraine and supply curbs by the OPEC+ producer group.

Ukraine has used drones to target Russian oil infrastructure, for example in June, when it used long-range attack drones to attack four Russian oil refineries.

Swelling U.S. crude and gasoline inventories and expectations of a supply glut next year are limiting price gains. [EIA/S]

"Our base case is for Brent to remain in the $70 to $85 range, with high spare capacity limiting upside, and OPEC and shale supply price elasticities limiting downside," Goldman Sachs analysts led by Daan Struyven said in a note.

"However, the risks of breaking out are growing," they said, adding that Brent could rise to about $85 a barrel in the first half of 2025 if Iran supply drops by 1 million barrels a day on tighter sanctions by the administration of U.S. President-elect Donald Trump.

Some analysts forecast another jump in U.S. oil inventories in next week's data.

"We will be expecting a rebound in production as well as U.S. refinery activity next week that will carry negative implications for both crude and key products," said Jim Ritterbusch of Ritterbusch and Associates in Florida.

The world's top crude importer, China, announced policy measures on Thursday to boost trade, including support for energy product imports, amid worries over Trump's threats to impose tariffs.

Source: Investing.com