Geopolitical tensions, supply concerns drive oil prices in Asian trading

(MENAFN) In early Asian trading on Monday, oil prices surged as worries over strained global supplies intensified due to escalating conflicts in the Middle East and heightened tensions between Russia and Ukraine. Brent crude futures climbed to USD85.67 per barrel, marking a 0.3 percent increase, while US crude futures saw a similar rise to USD80.88 per barrel, up by 0.3 percent as well. Despite the modest increments, the uptick underscored growing apprehensions within the market.

The recent escalation of geopolitical tensions has triggered alarm bells among investors and analysts. Hiroyuki Kikukawa of Nissan Securities highlighted the multifaceted nature of these concerns, stating, "The escalation of geopolitical tension, coupled with heightened attacks on energy infrastructure in Russia and Ukraine, alongside diminishing hopes for a ceasefire in the Middle East, have significantly elevated apprehensions surrounding oil supplies." Kikukawa emphasized that these developments, particularly in light of dwindling drilling activity in the United States, have intensified worries about the adequacy of future oil reserves.

Data from Baker Hughes, an energy services company, further confirmed the decline in US drilling activity, with the number of oil rigs dropping by one to reach 509 for the previous week. This decrease serves as a tangible indicator of potential challenges in meeting future oil demand, reinforcing anxieties about tightening supplies within the market. As geopolitical tensions continue to simmer and drilling activities remain subdued, the outlook for oil prices remains clouded by uncertainty, prompting investors to closely monitor developments in key regions and their implications for global energy markets.

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