Oil prices rise on Middle East conflict fears as Israel steps up attacks
Shafaq News/ Oil prices extended gains on Monday,buoyed by escalating concerns over potential supply pressures from Middle Eastproducers following Israel's increased attacks on Iranian-backed forces in theregion.
Brent crude futures for November deliveryincreased 51 cents, or 0.71%, to $72.49 a barrel as of 0330 GMT. That contractexpires on Monday, and the more-active contract for December delivery gained 50cents, or 0.7%, to $72.04.
U.S. West Texas Intermediate crude futures added43 cents, or 0.63%, to $68.61 a barrel.
Last week, Brent fell around 3%, while WTI fellby around 5% as demand worries increased after fiscal stimulus from China, theworld's second-biggest economy and top oil importer, failed to reassure marketconfidence.
However, prices on Monday were supported by thepossibility of a widening Middle East conflict involving Iran, a key producerand member of the Organization of the Petroleum Exporting Countries (OPEC),after Israel stepped up its attacks on the Hezbollah and Houthi militant groupsthat Iran backs.
While excessive supplies are a key concern foroil markets, markets broadly fear an escalation in the Middle Eastern crisisthat could dampen supplies from key producing regions, said Priyanka Sachdeva,senior market analyst at Phillip Nova.
Israel said it bombed Houthi targets in Yemen onSunday, expanding its confrontation with Iran's allies two days after killingHezbollah leader Sayyed Hassan Nasrallah in an escalating conflict in Lebanon.
U.S. Defence Secretary Lloyd Austin hasauthorised the military to reinforce its presence in the Middle East, with thePentagon saying on Sunday that should Iran, its partners, or its proxies targetU.S. personnel or interests, Washington "will take every necessary measureto defend our people".
In the context of Israel's decisive strike onHezbollah, oil prices will continue to be driven by supply and demand dynamics,said Tony Sycamore, market analyst at IG.
Given the upcoming end of OPEC+'s voluntarysupply cuts on Dec. 1, WTI may test its 2021 lows in the $61 to $62 a barrelrange, he said.
"Additionally, despite China's recent dovishshift, it's unclear if this will translate into higher fuel demand, consideringChina's advancements in electrifying and decarbonising its transportationsector," Sycamore added.
Later on Monday, markets will be waiting to hearfrom Federal Reserve Chair Jerome Powell for clues on the central bank's speedof monetary easing, and seven other Fed policymakers are due to speak thisweek, ANZ analysts said in a note.
Also due are data on job openings and privatehiring, along with ISM surveys on manufacturing and services.
With the Fed and other major central banksembarking on policy easing, some economic recovery could just be around thecorner, said Phillip Nova's Sachdeva.
"How well demand responds to easing rates,and how much Chinese demand revives after the major stimulus injected lastweek, will eventually shape oil market dynamics going forward," she said.
(Reuters)
