Oil Prices Rise on Middle East Conflict Fears
In a dramatic turn of events, oil prices surged on Monday, clawing back losses from the previous week. The market was shaken by the specter of a deepening conflict in the Middle East after a rocket attack in the Israeli-occupied Golan Heights. Israel and the United States pointed fingers at Lebanese armed group Hezbollah for the strike.
Brent Crude and WTI Futures Edge Up
Brent crude futures saw a 0.3 percent increase, adding 20 cents to reach $81.33 a barrel, while US West Texas Intermediate (WTI) crude futures rose 0.1 percent, climbing 9 cents to hit $77.25 a barrel.
Weekend Developments Spark Concerns
The previous week saw Brent losing 1.8 percent and WTI dropping 3.7 percent due to weakened Chinese demand and hopes for a ceasefire in Gaza. However, tensions escalated over the weekend as Israel’s security cabinet granted Prime Minister Benjamin Netanyahu the authority to determine the response to the deadly rocket strike in the Golan Heights that claimed the lives of 12 teenagers and children.
Hezbollah Denies Responsibility
Despite Israel and the US blaming Hezbollah for the attack, the Iran-backed group denied any involvement. The situation has escalated into a multi-front conflict, with Israel targeting southern Lebanon in retaliation.
Market Reaction and Concerns
Analyst Toshitaka Tazawa from Fujitomi Securities noted that fears of heightened tensions in the Middle East drove fresh buying in the market. However, concerns about weakening demand in China continue to linger, limiting the gains.
Ceasefire in Gaza Complications
Efforts to broker a ceasefire in Gaza face obstacles as Israel pushes for changes in the truce plan and the release of hostages by Hamas. This adds complexity to ending the nine months of conflict that have ravaged the region.
China’s Import Data Sparks Wider Demand Worries
Recent data showing an 11 percent drop in China’s total fuel oil imports in the first half of 2024 has raised alarms about the demand outlook in the world’s largest crude importer.
US Rig Count Increase
On a different note, US energy firms have added oil and natural gas rigs for the second consecutive week, marking the largest monthly surge since November 2022, according to a report by energy services firm Baker Hughes released on Friday.