Oil steady as prospect of higher supply offsets concerns over Middle East conflict By Reuters

(Reuters) – Oil prices were steady on Tuesday as the prospect of additional supply to the market amid weak growth in global demand offset fears that escalating conflict in the Middle East could disrupt exports in the key producing region.

Futures for December delivery were up 13 cents, or 0.18 percent, at $71.83 a barrel as of 0050 GMT. U.S. West Texas Intermediate crude futures for November delivery gained 11 cents, or 0.16 percent, to settle at $68.28 a barrel.

Oil markets have been under pressure from weaker-than-expected demand growth this year, particularly in China, the world’s biggest crude importer. Those concerns about demand were reinforced on Monday after data showed the country’s manufacturing activity contracted for a fifth month in September.

On Monday, Brent futures ended September down 9 percent, a third month of declines and the biggest monthly decline since November 2022. It fell 17 percent in the third quarter for its biggest quarterly loss in a year. WTI fell 7% last month and is down 16% for the quarter.

Despite concerns about demand, rising tensions between Israel and the Islamist militant group Hezbollah in Lebanon have raised the potential for Iran, a key oil producer and member of the Organization of the Petroleum Exporting Countries (OPEC), which backs the militia, to be drawn directly into the conflict and possibly disrupt oil exports from the region.

The Israeli military has begun limited, localized and targeted raids against Hezbollah targets in the southern Lebanese border area, it said in a statement early Tuesday.

However, major producers are set to increase production before the end of the year.

“Crude oil was little changed as traders took stock of the outlook amid rising tensions in the Middle East,” ANZ analysts said in a note.

“The risk of a supply disruption in the Middle East is offset by the prospect of increased production from OPEC. Despite its efforts to stabilize the oil market, prices remained under pressure,” they added.

OPEC+, which brings together OPEC members and allies such as Russia, is scheduled to increase production by 180,000 barrels per day in December.

Oil and fuel stockpiles were expected last week to have fallen by about 2.1 million barrels in the week to Sept. 27, a preliminary Reuters poll showed on Monday.

The survey was conducted ahead of a report by the American Petroleum Institute industry group due at 4:30 p.m. EDT (2030 GMT) on Tuesday.