The crude oil market posted its highest daily jump in a year following fears that Israel would attack Iranian infrastructure facilities in response to a missile attack launched earlier this week.
Brent crude traded below $78 a barrel after jumping as much as 5% in Thursday's trade as US President Joe Biden discussed whether to back a potential Israeli attack on Iran's energy hub.
The well-known commodity jumped 8% this week, its highest since last year, as the war escalated further affecting oil supplies in the Middle East.
For the past year, the war in the Arab region involving Israel, Gaza, Iran, Lebanon and Yemen has continued and sparked fears of a protracted conflict.
Head of Asia Economics and Strategy at Mizuho Bank, Vishnu Varathan said he was concerned that Israel would target Iran's oil production capabilities so that the attack could cripple Iran's capabilities.
Although prices have soared, oil may not have set its all-time high ahead of an all-out war.
Earlier, Iran launched a missile attack on Israel earlier this week after Israel stepped up attacks against Hezbollah including sending ground troops to southern Lebanon.
The increase in the conflict also gained the views of the G7 countries for a more controlled and responsible situation.
The Middle East accounts for about a third of the world's crude oil supply. Iran has pumped about 3.3 million barrels of crude oil a day in recent months, making it the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC).
If the big surge in oil prices continues, it could contribute to a rise in global inflation and prompt central banks to cut interest rates.
