Oil climbs more than $1/bbl on reports of Iran preparing to strike at Israel

Oil prices extended gains on Friday, climbing more than $1 a barrel to pare weekly losses, as geopolitical tensions in Middle East rose following reports that Iran was preparing a retaliatory strike on Israel from Iraq in coming days. Brent crude futures, which have rolled to January contract, climbed $1.31, or 1.80%, to $74.12 a barrel by 0128 GMT.

US West Texas Intermediate crude futures rose $1.35, or 1.95%, to $70.61 a barrel after settling up 0.95% in previous session.

Israeli intelligence suggests Iran is preparing to attack Israel from Iraqi territory in coming days, possibly before U.S. presidential election on v. 5, Axios reported on Thursday, citing two unidentified Israeli sources.

attack is expected to be carried out from Iraq using a large number of drones and ballistic missiles, Axios report added.

Oil prices were also supported by expectations that OPEC+ could delay December's planned increase to oil production by a month or more, four sources close to matter told Reuters on Wednesday, citing concern about soft oil demand and rising supply. A decision to delay increase could come as early as next week, two of sources said.

However, prices are set to fall more than 1% for week, struggling to recover from a 6% loss on Monday after Israel's strike against Iran's military on Oct. 26 bypassed oil and nuclear facilities and did t disrupt energy supplies.

"Despite crude oil market looking to lock in a third straight day of gains, it has been unable to completely erase large gap lower that followed Monday's re-open," said IG market analyst Tony Sycamore based in Sydney.

However, WTI's rebound should extend back towards where it closed last Friday at about $71.80, he added, as tensions in Middle East returned to focus.

"After that, though, all bets are off. I think it will depend on who wins U.S. election and what fiscal stimulus details, if any, come from NPC standing committee meeting," Sycamore said, referring to major events in U.S. and China, world's largest oil consumers, next week.

In China, manufacturing activity swung back to growth in October, a private-sector survey showed on Friday, echoing an official survey on Thursday that showed manufacturing activity expanded in October for first time in six months. Both surveys suggest stimulus measures are having an effect.

U.S. gasoline stockpiles fell unexpectedly last week to a two-year low on strengned demand, Energy Information Administration (EIA) said on Wednesday, while crude inventories also posted a surprise drawdown as imports slipped. world's largest oil producer pumped a monthly record high of 13.4 million barrels per day in August, EIA said.