Singapore, Sept 30 (Reuters) – Oil prices continued to rise on Monday, fueled by growing concerns over potential supply disruptions from Middle Eastern producers after Israel escalated its attacks on Iranian-backed forces in the region.
Brent crude futures for November delivery rose by 51 cents, or 0.71%, to $72.49 per barrel by 0330 GMT. This contract expires today, while the more-active December contract increased by 50 cents, or 0.7%, reaching $72.04. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures gained 43 cents, or 0.63%, trading at $68.61 per barrel.
Last week, both benchmarks saw declines—Brent dropped about 3%, and WTI fell by approximately 5%. This was driven by growing concerns over demand, as recent fiscal measures from China, the world’s second-largest economy and leading oil importer, failed to boost market confidence.
However, Monday’s price increase was supported by fears that the conflict in the Middle East, involving Iran—a key member of the Organization of the Petroleum Exporting Countries (OPEC)—could worsen. Israel intensified its strikes on Hezbollah and Houthi militants, groups backed by Iran. According to Priyanka Sachdeva, senior market analyst at Phillip Nova, while oversupply remains a concern, the potential escalation of this conflict could significantly disrupt supplies from major oil-producing areas.
On Sunday, Israel reported bombing Houthi targets in Yemen, expanding its confrontations with Iran’s allies. This came just two days after Israel’s assassination of Hezbollah leader Sayyed Hassan Nasrallah in Lebanon. The U.S. has responded to the situation by reinforcing its military presence in the Middle East. U.S. Defense Secretary Lloyd Austin stated that if Iran or its proxies target U.S. interests, the U.S. would “take every necessary measure” to defend its personnel.
Tony Sycamore, a market analyst at IG, noted that oil prices will continue to be shaped by the evolving supply and demand landscape, especially in light of Israel’s actions against Hezbollah. He added that with OPEC+’s voluntary supply cuts set to end on December 1, WTI prices could test 2021 lows, potentially dipping into the $61 to $62 per barrel range.
Sycamore also commented on the uncertainties surrounding China’s recent economic policies. Despite China’s efforts to stimulate the economy, it remains unclear if this will boost fuel demand, especially given China’s advancements in electric vehicles and decarbonization.
Later on Monday, markets will be focused on comments from Federal Reserve Chair Jerome Powell for hints on the pace of monetary easing. Additionally, seven other Federal Reserve policymakers are scheduled to speak this week, according to analysts at ANZ.
Key economic data releases are expected, including reports on job openings, private hiring, and manufacturing and services activity from the Institute for Supply Management (ISM).
Phillip Nova’s Sachdeva suggested that as the Federal Reserve and other central banks begin easing policies, economic recovery could be on the horizon. She concluded that the future of oil prices will depend on how demand responds to lower interest rates and whether China’s recent stimulus leads to a resurgence in fuel consumption.
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