Early Asian trading on Monday saw a significant rise in oil prices, fueled by growing concerns over tightening global supply amidst escalating conflicts in the Middle East and between Russia and Ukraine. Additionally, a decline in the US rig count further added to the upward pressure on prices.
Brent crude futures surged by 0.3 per cent, climbing 24 cents to reach $85.67 per barrel, while US crude futures also experienced a 0.3 per cent gain, rising 25 cents to $80.88 per barrel. Both benchmarks had registered less than a 1 per cent change the previous week compared to the week prior.
The surge in oil prices was attributed to escalating geopolitical tensions, with Hiroyuki Kikukawa, president of NS Trading, citing rising attacks on energy facilities in Russia and Ukraine, alongside diminishing hopes for a ceasefire in the Middle East, as key factors contributing to concerns over global oil supply.
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Over the weekend, tensions escalated further as Ukraine reported a major air strike by Russia on critical infrastructure in Lviv, with one Russian cruise missile briefly breaching Polish airspace. This attack followed Ukraine's recent targeting of Russian oil infrastructure, with at least seven refineries hit by drones this month.
In the Middle East, Israeli forces intensified their siege on Gaza hospitals, prompting condemnation from the Palestinian Red Crescent. Meanwhile, US Secretary of State Antony Blinken warned Israeli Prime Minister Benjamin Netanyahu against attacking the Palestinian city of Rafah, cautioning against the risk of global isolation.
Amidst these tensions, the US oil rig count fell by one to 509 last week, according to data from energy services firm Baker Hughes, signalling potential constraints on future supply. The combination of these factors has underscored the volatility and uncertainty in global oil markets.
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