Oil Prices Rise Amid US Rate Cut and Geopolitical Concerns, According to Reuters

Oil Prices Increase Amid Middle East Tensions and U.S. Rate Cut Expectations

SINGAPORE – Oil prices experienced a slight increase during early trading on Monday, driven by concerns that ongoing conflicts in the Middle East may disrupt supplies in this critical production region. Additionally, there are expectations that the recent U.S. interest rate cut will help bolster demand.

Futures for November rose by 20 cents, or 0.3%, reaching $74.69 a barrel, while November futures for another benchmark increased by 22 cents, or 0.3%, to $71.22.

The previous session saw both contracts rise, fueled by the U.S. rate cut and a decline in domestic supply following Hurricane Francine. Oil prices recorded gains for a second consecutive week.

Last Wednesday, the U.S. Federal Reserve announced a reduction in interest rates by half a percentage point—a larger cut than many had anticipated. Typically, such rate cuts are expected to boost economic activity and energy demand; however, analysts and market watchers are wary of the potential slowing of the job market.

"Market sentiment was lifted by the Fed’s rate cut, with hopes for a gentle landing for the economy," noted a representative from ANZ. "In addition, a weaker U.S. dollar has also enhanced investor interest."

Furthermore, ANZ pointed out that the ongoing conflict involving Israel and Iranian-backed militias has raised alarms about the potential involvement of Iran, a significant oil producer in the region.

In recent developments, heavy exchanges of fire occurred between Hezbollah, an Iranian-supported group based in Lebanon, and Israeli forces, particularly over the weekend, as rockets were launched deep into northern Israeli territory following intense bombardments that have escalated the conflict.

The situation has intensified dramatically in the past week, primarily after the explosion of thousands of pagers and walkie-talkies used by Hezbollah operatives, an incident widely attributed to Israel, though the nation has neither confirmed nor denied involvement.