Oil prices climbed higher on Friday, poised for a positive week, driven by news that the U.S. plans to replenish its Strategic Petroleum Reserve and escalating fears of the Israel-Gaza crisis spreading across the Middle East, potentially disrupting oil supply.

As of 09:05 ET (13:05 GMT), U.S. crude futures were up by 0.9% at $89.22 per barrel, while the Brent contract rose by 0.9% to $93.25. Both benchmarks are set for weekly gains, with the U.S. contract up by 2% and Brent higher by 2.8%.

The boost in the oil market came after U.S. President Joe Biden announced plans to refill the heavily-depleted Strategic Petroleum Reserve. The Department of Energy revealed two separate offers for crude purchases totaling 6 million barrels, to be delivered between December this year and January 2024. The U.S. government had withdrawn about 200 million barrels from the SPR since early 2022, leading to its lowest level in almost 40 years, aimed at combating high gasoline prices following the Russia-Ukraine conflict.

Additionally, crude prices were supported throughout the week due to the ongoing Israel-Hamas conflict. Israel pledged to eliminate the Hamas group in Gaza after its militants killed hundreds of Israeli civilians. The conflict led to air strikes in the region and preparations for a ground assault, raising concerns about potential disruptions in oil supply. Analysts at Commerzbank noted that the possibility of an Israeli ground offensive in Gaza had significantly increased oil prices, although the market’s supply situation remained unchanged.

Concerns persisted about the conflict spreading further in the volatile region, especially after the Pentagon reported intercepting three cruise missiles and several drones launched by the Houthi movement in Yemen, potentially targeting Israel. The Houthi, similar to Hamas in Gaza and Lebanon’s Hezbollah, receive backing from Iran.

Federal Reserve Chair Jerome Powell’s remarks indicating the resilience of the U.S. economy also provided support to oil markets. Powell’s comments suggested strong fuel consumption in the U.S., further reinforced by larger-than-expected inventory draws in the world’s largest oil consumer.

Additionally, positive economic growth data from China, the largest crude oil importer globally, boosted confidence in oil markets. Refineries in China processed a record 15.5 million barrels per day of crude oil in September, and domestic demand remained robust, leading to 200,000 barrels per day reduction in domestic crude oil inventories last month, according to analysts at ING.