Oil price rose strongly on Monday, extending recent gains on fears of a wider war in the Middle East.
At 08:20 GMT (12:20 GMT), Brent crude futures rose 1.7% to $79.39 a barrel and West Texas Intermediate crude futures climbed 1. 9% to $75.78 a barrel.
Both contracts rallied between 8% and 10% last week as heightened tensions in the Middle East were boosted by positive US payrolls data, which revived hopes that the US economy is more resilient than expected. at first he was afraid.
However, trading volume was somewhat limited due to the Chinese Golden Week holiday. Chinese markets are due to reopen on Tuesday.
Focus on supply disruptions on 1-year anniversary of Israel-Hamas war
Oil bulls rallied on bets on supply disruptions in the Middle East as the Israel-Hamas war showed little sign of abating. Monday marked one year since Hamas’ attack on Israel sparked fresh hostilities between the two countries.
Reports on Monday said that Hezbollah rockets had hit Israel’s third largest city, Haifa.
Israel struck Hezbollah targets in Lebanon and the Gaza Strip on Sunday, days after Iran launched a large-scale missile attack on Israel for its activities against Hezbollah and Hamas.
Reports said Israel was considering attacking Iran’s oil production facilities – a move that could disrupt oil supplies and signal a drastic escalation of the conflict.
Demand cues, interest rates remain in focus
Oil markets remained focused on more signs of demand, especially after top importer China announced a series of economic stimulus measures in recent weeks.
Upbeat data on the US labor market also helped boost some optimism about demand in the world’s biggest fuel consumer. However, the measure sparked sharp gains in the dollar, which in turn weighed on crude prices.
The rise of crude oil is likely – BCA
Risks of a spike in crude oil price have increased, according to analysts at BCA Research.
While BCA maintains a cyclical outlook that crude prices are likely to weaken over the next six to nine months, the immediate market environment is full of uncertainties that could support higher prices in the near term.
Geopolitical tensions, particularly the escalating conflict in the Middle East, are creating supply-side risks that have alerted market participants to the possibility of a supply shock.
This potential disruption comes at a time when the region accounts for a significant portion of global crude production, raising alarm that infrastructure could be targeted for future retaliatory attacks.
Despite these concerns, BCA Research notes that there is still plenty of spare capacity within the OPEC+ bloc to offset any temporary supply shocks.
Key OPEC+ producers have held back significant output and may be willing to step in and increase production to stabilize the market.
The group kept output unchanged during last week’s meeting, but also reiterated its plans to start raising output from December.
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Reference;
Nurse, P. (2024) Oil prices rise continue to climb on heightened Middle East tensions By Investing.com, Investing.com. Investing.com. Available at: https://www.investing.com/news/commodities-news/oil-prices-dip-after-middle-east-tensions-spark-bumper-weekly-gain-3650229 (Accessed: 7 October 2024).
