Oil prices stabilized on Friday but remained on track for strong weekly gains as investors weighed the prospect of a widening conflict in the Middle East that could disrupt crude oil flows against a well-supplied global market.

Brent crude futures held steady at $77.55 a barrel, while U.S. West Texas Intermediate crude futures changed slightly to record $73.65 a barrel. Both contracts are heading for weekly gains of about 8%.

Bearish bets on oil found some room to unwind this week amid growing concerns over potential supply disruptions in the Middle East, along with optimism that China's recent economic stimulus efforts may provide some support for demand.

U.S. President Joe Biden discussed on Thursday whether the U.S. would support strikes on Iranian oil facilities as retaliation. Biden's comments contributed to a 5% increase in oil prices on Thursday.

Supply risks have returned to the forefront as tensions in the Middle East escalate, but the impact may be limited.

The Middle East accounts for more than a third of the world's oil supply, making a direct attack on Iranian oil facilities the least likely option.

Concerns over oil supply that drove prices up earlier in the week have been eased by OPEC's spare production capacity and the fact that global oil supplies have yet to be affected by unrest in the Middle East.

The eastern Libyan government and the National Oil Corporation in Tripoli announced on Thursday the reopening of all oil fields and export terminals after resolving a dispute over central bank leadership, ending a crisis that had significantly reduced oil production.

Iran and Libya are both OPEC members. Iran, which operates under U.S. sanctions, produced about 4.0 million barrels per day of fuel in 2023, while Libya produced about 1.3 million barrels per day last year, according to data from the U.S. Energy Information Administration.

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