Oil prices edged upward on Monday due to rising concerns about potential supply disruptions from the Middle East following Israel’s escalation of attacks on forces supported by Iran.
As of early Monday, Brent crude futures for November delivery rose by 16 cents, or 0.22%, reaching $72.14 a barrel. The November contract is set to expire, while the more actively traded December contract saw a modest gain of 10 cents, or 0.14%, to settle at $71.64 per barrel.
Meanwhile, U.S. West Texas Intermediate (WTI) crude futures advanced by 8 cents, or 0.12%, landing at $68.26 a barrel.
Despite a challenging week where Brent dropped roughly 3% and WTI shed about 5% amid rising demand concerns, Monday’s trading was supported by fears of an expanding conflict in the Middle East that could involve Iran, a significant oil producer and a key member of the Organization of the Petroleum Exporting Countries (OPEC). Israel’s increased strikes on Iran-backed groups like Hezbollah and the Houthis have heightened these concerns.
According to a note from ANZ Research, “The recent intensification of attacks in the Middle East raises the chances of Iran being drawn into the conflict, creating a significant risk of supply disruptions from a crucial OPEC producer.”
Israel’s recent offensive included strikes on Houthi targets in Yemen on Sunday, broadening its confrontation with Iranian-aligned forces just two days after the reported killing of Hezbollah leader Sayyed Hassan Nasrallah in Lebanon, marking an escalation in the ongoing regional conflict.
In response, the U.S. has reinforced its military presence in the region. U.S. Defense Secretary Lloyd Austin announced on Sunday that additional troops would be deployed to safeguard American interests. The Pentagon stated that if Iran or its affiliates target U.S. personnel or assets, Washington would “take every necessary action to protect our people.”
Later in the day, investors will be closely watching comments from Federal Reserve Chair Jerome Powell, alongside statements from seven other Fed policymakers expected throughout the week, as markets look for hints on the central bank’s approach to future monetary policy adjustments.
Nonetheless, oil prices remain under pressure due to OPEC and its allies, known collectively as OPEC+, planning to increase production by 180,000 barrels per day starting in December. Additionally, oil exports from Libya are anticipated to resume, adding more supply to the market.
