Oil settled slightly higher on Friday, but posted a weekly decline, after
Iran played down a reported Israeli attack on its soil, a sign that an escalation of
hostilities in the Middle East might be avoided.
Brent futures settled up 18 cents, or 0.21%, at $87.29 a barrel.
The front month U.S. West Texas Intermediate (WTI) crude contract for May ended 41 cents higher, or 0.5%, to $83.14 a barrel. The more active June contract closed 12 cents higher at $82.22 a barrel.
Both benchmarks spiked more than $3 a barrel earlier in the session after explosions were heard in the Iranian city of Isfahan in what sources described as an Israeli attack. However, the gains were capped after Tehran played down the incident and said it did not plan to retaliate.
"It was nothing but a big show, and so the markets deflated as quickly as they spiked," said Tim Snyder, economist at Matador Economics.
Investors had been closely monitoring Israel's response to Iranian drone and missile attacks on April 13 that was in turn a response to a presumed Israeli air strike on April 1 that destroyed a building in Iran's embassy compound in Damascus.
Meanwhile, U.S. lawmakers have added sanctions on
Iran's oil exports to a pending Ukraine aid package after Tehran's strike on Israel last weekend.
Iran is the third largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), according to Reuters data.