Oil Surges Amid Mideast Tensions and Rate Cut Hopes

26 Aug 2024 , 09:50 AM

Oil prices rose on Monday on fears that a big spillover from the Gaza conflict into the Middle East might disrupt regional oil supplies, while impending US interest rate reduction improved the global economic and fuel demand outlook.

Brent crude prices rose 37 cents, or 0.5%, to $79.39 per barrel, while US crude futures rose 36 cents, or 0.5%, to $75.19 per barrel.

In one of the most intense skirmishes in more than ten months of border warfare, Hezbollah launched hundreds of missiles and drones into Israel on Sunday, while Israel’s military said it targeted Lebanon with roughly 100 jets to prevent a larger strike.

The clash raises concerns that the Gaza conflict would escalate into a regional conflagration including Hezbollah’s patron Iran and Israel’s primary supporter, the United States.

Both oil benchmarks rose by more than 2% on Friday as US Federal Reserve Chair Jerome Powell signalled an impending start to interest rate cuts.

Nonetheless, oil prices fell last week as a bleak prognosis for major economies weighed on gasoline demand, the bank said.

The US Energy Department announced on Friday that it purchased over 2.5 million barrels of oil to help refill the Strategic Petroleum Reserve.

Last week, the number of operating oil rigs in the United States remained steady at 483, according to Baker Hughes’ weekly report.

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