Oil Prices Surge Amid Middle East Tensions
The oil market is experiencing a volatile phase as renewed geopolitical tensions in the Middle East and concerns over Chinese demand impact global energy markets.
Published July 30, 2024 - 00:07am
On Monday, oil prices witnessed a notable increase, successfully reversing the losses incurred in the previous week. Brent crude futures rose by 20 cents or 0.3% to $81.33 per barrel. Meanwhile, the futures for West Texas Intermediate (WTI) grew by 9 cents or 0.1%, reaching $77.25 per barrel.
This rise in oil prices is also influenced by the aftermath of a rocket attack on the Golan Heights, which both Israel and the United States have blamed on the Lebanese militant group Hezbollah. Over the past week, Brent crude faced a decline of 1.8%, while WTI recorded a drop of 3.7% due to weakened Chinese demand and the global anticipation of a potential ceasefire in Gaza.
On Sunday, the Israeli security cabinet granted Prime Minister Benjamin Netanyahu the authority to decide on the response timing and manner regarding the rocket attack, which resulted in the deaths of 12 children and young people. Although Hezbollah has denied any involvement, the attack is recognized as the most lethal that Israel or annexed territories have faced since Hamas's offensive on October 7 ignited the ongoing conflict in Gaza.
As this conflict extends to multiple fronts and threatens to escalate into a larger regional war, Israel has vowed retaliation against Hezbollah in Lebanon. Israeli aircraft bombarded targets in southern Lebanon on Sunday. In the view of Toshitaka Tazawa, an analyst at Fujitomi Securities, mounting tensions in the Middle East have prompted new buying activities in the oil market, though the overall gains were tempered by ongoing concerns over China's slackened demand.
For several weeks, the prospect of a ceasefire in Gaza has been gaining momentum; however, Israel's insistence on modifying the terms of the truce and the release of hostages held by Hamas complicates the final ceasefire deal, as reported by Western, Palestinian, and Egyptian sources. The Israeli military campaign has caused extensive destruction in Gaza.
Data released earlier this month indicated that China's total fuel oil imports decreased by 11% in the first half of 2024, raising wider concerns about future demand in the world's top crude importer. Additionally, last week, American energy firms expanded the number of oil and natural gas rigs for the second week running, significantly raising the monthly count for the first time since November 2022, as stated by Baker Hughes, a well-regarded energy service firm.