Crude Oil Prices Hold Steady Amid Middle East Tensions

Investing.com — Crude prices hovered around the flatline on Monday, buoyed by concerns that heightened conflict in the Middle East may curtail regional supply.

By 08:30 ET, the Brent contract was mostly flat at $74.51 a barrel, while U.S. crude futures (WTI) traded 0.2% higher at $70.21 per barrel.

Traders were seen attaching a risk premium to oil prices as Israel continued to carry out strikes in Gaza and Lebanon, raising fears of a broader conflict disrupting supplies.

Hezbollah recently vowed retaliation against Israel following the alleged detonation of electronic devices used by the Lebanese group.

The ongoing violence and threats of war heightened concerns that a larger conflict in the Middle East will tighten global oil markets. Crude prices have rebounded from near three-year lows over the past two weeks, driven by supply fears stemming from Hurricane Francine.

Analysts from Bank of America noted that “sentiment among energy investors has turned decisively bearish” due to OPEC+’s plans to phase out voluntary output cuts. The oil group is set to gradually restore 2.2 million barrels per day from December 2024 to November 2025, although this timeline was previously delayed by two months.

“Speculative net positioning in total petroleum futures and options recently dropped to the lowest levels since at least 2011, suggesting investors are already more than positioned for a falling energy price environment,” said Bank of America analysts.

Weak demand in top oil importer China, concerns over rising trade tensions, and the potential for a “hard landing” of the global economy have further dampened outlooks.

Nevertheless, the analysts believe that price risks are “more balanced,” citing expectations for an increase in global energy consumption driven by productivity spikes fueled by artificial intelligence.

“It is important to remember that the upcoming clash between artificial intelligence and the fight against climate change has energy at its core,” the BofA analysts stated.