Oil prices rise amid Middle East tensions, robust US services data
(MENAFN) On Tuesday, oil prices rose by 1 percent, recovering from the previous session's losses due to mounting concerns that an escalating conflict in the Middle East could impact supply, coupled with strong U.S. services data and reduced output from Libya's Sharara oilfield. brent crude futures increased by 76 cents, or 1 percent, reaching USD77.06 per barrel, while U.S. West Texas Intermediate crude futures climbed by 92 cents, or 1.26 percent, to settle at USD73.86 per barrel. This recovery followed a roughly 1 percent decline in both benchmark crudes the day before, which was influenced by a downturn in global stock markets.
Market analyst Priyanka Sachdeva from Philip Nova in Singapore noted that oil prices rebounded as fears over a potential escalation in the Middle East conflict continued to weigh on the market, increasing concerns about global oil supply disruptions. The threat of a full-blown war in the region has heightened anxieties, suggesting a real risk to global oil supplies. Additionally, the oil market received a boost from data indicating that the U.S. service sector, the largest consumer of oil worldwide, had rebounded from a four-year low in July. This positive economic indicator contributed to the recovery in oil prices.
Further support for oil prices came from a broader rally in Asian stock markets, reflecting a general improvement in risk sentiment. IG market strategist Yep Jun Rong highlighted that the strength of the U.S. services sector helped ease concerns about growth risks in the United States. However, he also cautioned that it might take more robust economic signals to fully reassure markets about a stronger outlook for global oil demand. The combination of geopolitical tensions, positive U.S. economic data, and reduced Libyan oil output provided a complex backdrop that ultimately supported a rise in oil prices, underscoring the volatility and sensitivity of the oil market to various global factors.
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