Oil rates experience uptick over increasing supply worries in Middle East

9/25/2024 8:16:03 AM

(MENAFN) Oil prices experienced an uptick on Monday, driven by concerns over potential disruptions in supply due to escalating conflicts in the Middle East, coupled with expectations that last week’s interest rate cut by the U.S. Federal Reserve will bolster demand.

By 11:19 a.m. local time (0819 GMT), the international benchmark brent crude had risen by 0.16 percent, reaching USD73.81 per barrel, slightly up from the previous session's close of USD73.69. Meanwhile, U.S. benchmark West Texas Intermediate (WTI) saw a 0.17 percent increase, trading at USD71.12 per barrel after closing at USD71 in the prior session.

Market participants are closely monitoring developments in the Middle East, home to a significant portion of the world’s oil reserves. The renewed tensions in this critical region have heightened concerns over potential output disruptions, contributing to upward price trends.

The situation along the Israeli-Lebanese border has escalated dangerously, with the conflict between the Israeli military and the Lebanese Hezbollah group threatening to ignite a full-scale war. Recently, an Israeli airstrike on a southern suburb of Beirut resulted in the deaths of 45 individuals and injured 68, as reported by the Lebanese Health Ministry. In retaliation, Hezbollah announced that it had targeted Israeli military-industrial complexes north of Haifa, with Israel confirming that five people were injured in the attack.

Since the onset of the Israeli war on Gaza, which has resulted in over 41,400 fatalities, primarily among women and children, tensions have only intensified. This conflict began following a cross-border assault by Hamas on October 7 of the previous year.

Adding to the positive momentum in oil prices is the U.S. Federal Reserve’s recent decision to cut interest rates. Last week, the Fed lowered its benchmark interest rate by 50 basis points to a range of 4.75 percent-5.0 percent, marking the beginning of an aggressive monetary easing policy aimed at stimulating economic activity.

As the situation evolves, both geopolitical tensions and monetary policy will continue to play crucial roles in shaping the trajectory of oil prices in the near future.

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