Middle East tensions ease, oil prices retreat

12 Feb 2024 , 09:41 AM

Following Israel’s announcement that it had ‘concluded’ a series of strikes in southern Gaza, worries about Middle Eastern oil supply were somewhat allayed, and oil prices declined in early Asian trade on Monday.

U.S. West Texas Intermediate crude futures were down 46 cents, or 0.6%, at $76.38 a barrel, while Brent crude futures were down 43 cents, or 0.5%, at $81.76 a barrel.

Prices increased by almost 6% last week due to geopolitical concerns, which included the possibility of an oil supply disruption in the Middle East and the feared extension of the Israel-Palestine conflict throughout the area.

Days after Israeli Prime Minister Benjamin Netanyahu turned down a ceasefire request from Hamas, the Israeli military announced on Monday that it has carried out a ‘series of strikes’ on southern Gaza that have now ‘concluded.’

Although supply worries in the Middle East persisted, some of them were allayed by U.S. news.

The number of oil and gas rigs operated by US energy companies reached its highest level since mid-December, possibly indicating a rise in output. Last week, domestic output reached a record 13.3 million barrels per day (bpd).

Concerns about demand persisted as another Federal Reserve member added to the chorus calling for further inflation control by stating she had no interest in suggesting a reduction in interest rates. Interest rate increases impede economic expansion, which reduces demand for oil.

Due to the holiday closures of most of the area, including China, Hong Kong, Japan, South Korea, Singapore, Taiwan, Vietnam, and Malaysia, trading in Asia is anticipated to be light during these hours.

Mainland The Lunar New Year holiday has halted China’s financial markets; trading will return on Monday, February 19. Trade with Hong Kong will return on February 14.

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