TOKYO/SINGAPORE (Reuters) – Oil prices edged higher on Monday as the fall of Syrian President Bashar al-Assad’s regime introduced heightened uncertainty in the Middle East. However, gains were limited by concerns over weakening global demand for the coming year.
Brent crude futures increased by 36 cents, or 0.51%, reaching $71.48 per barrel by 0513 GMT. U.S. West Texas Intermediate (WTI) crude futures rose 38 cents, or 0.57%, to $67.58 per barrel.
On Sunday, Syrian rebels announced on state television that they had removed President Assad, ending a five-decade family rule. The swift offensive has raised fears of further instability in a region already affected by conflict.
“The situation in Syria has added another layer of political uncertainty in the Middle East, which is providing support to the oil market,” said Tomomichi Akuta, a senior economist at Mitsubishi UFJ Research and Consulting.
He added, however, that weaker demand signals from China, coupled with recent Saudi price cuts and OPEC+ actions, suggest the market may soften as the year progresses.
Saudi Price Cuts and OPEC+ Actions Reflect Weak Demand
Saudi Aramco, the world’s largest oil exporter, announced on Sunday that it had reduced its January 2025 prices for Asian buyers to the lowest level since early 2021. This move reflects continued weak demand from China, the world’s largest crude importer.
Last Thursday, OPEC+—a coalition of the Organization of the Petroleum Exporting Countries and its allies—delayed its planned oil output increases by three months, pushing them back to April 2025. The group also extended the full unwinding of production cuts until the end of 2026.
OPEC+, which accounts for roughly half of global oil production, had originally intended to ease cuts from October 2024. However, slowing global demand and rising output from other producers have forced repeated postponements.
Rising U.S. Production and Economic Data in Focus
In the United States, oil and gas rig activity reached its highest level since mid-September last week, signaling increased output from the world’s largest crude producer.
Despite recent price increases, both Brent and WTI posted losses for the past two consecutive weeks as the market anticipates a supply surplus in 2025.
As prices fell, money managers raised their net long positions in U.S. crude futures and options during the week ending December 3, according to the U.S. Commodity Futures Trading Commission.
This week, investors will closely watch key data releases, including a U.S. inflation report on Wednesday that could provide insight into the Federal Reserve’s future interest rate decisions.
China’s Economic Struggles Add Pressure
China’s economy remains under scrutiny as policymakers prepare to outline plans for 2025 during a major conference in Beijing this week.
Recent data showed China’s consumer inflation fell to a five-month low in November, while factory deflation persisted. These trends indicate that government measures to boost demand have had limited impact so far, raising concerns about slowing global economic growth and its implications for oil demand.
ANZ analysts noted on Monday that even further U.S. Federal Reserve rate cuts might not resolve market worries about weakening global growth.
With a combination of geopolitical instability, supply concerns, and economic uncertainty, the oil market remains poised for further fluctuations.
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