Oil gains on fears of wider Middle East conflict | Business

Ammon News – Oil prices rose on Monday, paring last week’s loss on fears of a wider conflict in the Middle East following a missile strike on the Israeli-occupied Golan Heights, which Israel and the United States blamed on the Lebanese armed group Hezbollah .

Brent crude futures gained 40 cents, or 0.5 percent, to $81.53 a barrel by 0650 GMT. U.S. West Texas Intermediate (WTI) crude futures were up 34 cents, or 0.4 percent, at $77.50 a barrel.

Last week, Brent lost 1.8 percent, while WTI fell 3.7 percent on lower Chinese demand and hopes of a cease-fire deal in Gaza.

Israel’s security cabinet on Sunday authorized Prime Minister Benjamin Netanyahu’s government to decide the “manner and timing” of a response to Saturday’s rocket strike in the Golan Heights that killed 12 teenagers and children.

Iran-backed Hezbollah denied responsibility for the attack, the deadliest in Israel or the Israeli-annexed territory since an October 7 attack by Palestinian militant group Hamas sparked the Gaza war. This conflict has expanded on several fronts and risks spilling over into a wider regional conflict.

Israel has vowed to retaliate against Hezbollah in Lebanon, and Israeli jets struck targets in southern Lebanon on Sunday.

“Concerns over escalating tensions in the Middle East prompted fresh buying, but gains were limited by lingering concerns about weakening demand in China,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.

Over the past few weeks, hopes for a cease-fire in Gaza have grown.

But Israel wants changes to the plan for a truce in Gaza and the release of hostages by Hamas, complicating a deal to end nine months of fighting that has devastated the enclave, according to a Western official, a Palestinian and two Egyptian sources.

On the demand side, data released earlier this month showing China’s total fuel oil imports fell 11% in the first half of 2024 raised concerns about the broader demand outlook in the Asian giant, the largest importer of crude oil in the world.

“Demand concerns remain a key factor weighing on crude oil prices. Economic growth slowed in China in the second quarter, while domestic consumption demand was sluggish,” said independent market analyst Tina Teng.

She added that the US Federal Reserve’s rate decision and China’s manufacturing PMI are the next key events for markets as they try to gauge the trajectory of the oil market.

Meanwhile, U.S. energy firms last week added oil and natural gas rigs for a second straight week, raising the monthly tally by the most since November 2022, energy services firm Baker Hughes ( BKR.O ) said, opening a new tab in tight. Friday’s report followed.

Markets are also watching Venezuela’s oil producer after the country’s electoral authority said President Nicolas Maduro had won a third term with 51 percent of the vote, despite several exit polls pointing to a victory for the opposition.

US Secretary of State Antony Blinken said the US had serious concerns that the results did not reflect the people’s votes.

The United States has previously said it will “calibrate” its sanctions policy toward Venezuela depending on how the high-stakes election in the OPEC nation plays out.

Reuters