Oil Prices Edge Higher Amid Middle East Tensions

By Katya Golubkova

TOKYO (Reuters) – Oil prices edged higher on Monday due to rising concerns over potential supply disruptions from the Middle East as Israel intensified attacks on Iranian-backed forces.

Brent crude futures for November delivery increased by 16 cents, or 0.22%, reaching $72.14 a barrel as of 0043 GMT. This contract expires on Monday, while the more-active December delivery contract gained 10 cents, or 0.14%, to $71.64.

U.S. West Texas Intermediate (WTI) crude futures added 8 cents, or 0.12%, to $68.26 a barrel.

Last week, Brent experienced a decline of about 3%, while WTI fell approximately 5% as concerns over demand grew after China’s fiscal stimulus failed to bolster market confidence.

Nonetheless, prices on Monday were bolstered by fears of an expanding conflict in the Middle East, particularly involving Iran, a significant oil producer and OPEC member, following Israel’s attacks on Hezbollah and Houthis, who are supported by Iran.

ANZ Research noted that, “The recent escalation of attacks in the Middle East is increasing the likelihood of Iran being directly dragged into the conflict, putting a significant risk around supply disruptions at the OPEC producer.”

Israel claimed to have bombed Houthi targets in Yemen on Sunday, escalating its confrontation with Iran’s allies after killing Hezbollah leader Sayyed Hassan Nasrallah, contributing to heightened tensions in Lebanon.

U.S. Defense Secretary Lloyd Austin has authorized the military to bolster its presence in the Middle East, stating that if Iran or its proxies target U.S. personnel or interests, “Washington will take every necessary measure to defend our people.”

Later on Monday, markets are anticipated to focus on Federal Reserve Chair Jerome Powell for insights regarding the Fed’s monetary policy easing pace, with seven additional Fed policymakers scheduled to speak this week, as stated in ANZ’s note.

However, prices continue to face pressure as OPEC and its allies, referred to as OPEC+, plan to increase output by 180,000 barrels per day in December, with an expected increase in oil exports from Libya as well.