Crude oil futures began the week on a positive note, driven by heightened geopolitical tensions in the Middle East over the weekend.
As of 0815 GMT, front-month November 2024 ICE Brent futures were trading at $72.56 per barrel, an increase from Friday’s settlement of $71.98. Meanwhile, November 2024 NYMEX WTI futures rose to $68.62 per barrel, up from Friday’s close of $68.18.
The benchmarks are recovering from two-week lows recorded last Thursday, following the killing of Hezbollah chief Hassan Nasrallah during a series of Israeli airstrikes in Beirut. Analysts indicate that this event marks a significant escalation in the ongoing regional conflict.
According to ANZ Bank’s latest research note, “The recent escalation of attacks in the Middle East increases the likelihood of Iran being directly drawn into the conflict, raising concerns about potential supply disruptions among OPEC producers.” However, analysts caution that any upward momentum in prices could be limited unless further escalations disrupt regional oil flows.
Last week, oil prices experienced a decline after the Financial Times reported that OPEC+ leader Saudi Arabia was supporting plans for the group to implement scheduled output increases starting in December. This move, reportedly backed by the wider coalition, has yet to be formally confirmed, and any final decision may not occur until the early November OPEC+ ministerial meeting.
“The frustration of Saudi Arabia with non-compliant members like Iraq, Kazakhstan, Russia, and the UAE is apparent. They may be signaling a willingness to increase production unless compliance improves,” commented Ole S. Hansen, Head of Commodity Strategy at Saxo Group.
Later on Monday, investors will be closely watching remarks from Federal Reserve Chair Jerome Powell at the U.S. National Association for Business Economics conference, seeking indications regarding a potential follow-up interest rate cut in November, following a 50 basis point reduction in September.
