Oil Prices Increase Amid Middle East Supply Concerns as Israel Intensifies Attacks – Reuters

By Katya Golubkova

TOKYO (Reuters) – Oil prices rose slightly on Monday amid rising worries about potential supply disruptions in the Middle East due to escalated attacks by Israel on Iranian-backed forces.

Futures for November delivery increased by 16 cents, or 0.22%, reaching $72.14 a barrel as of 0043 GMT. This contract expires on Monday, while the more actively traded December contract gained 10 cents, or 0.14%, to $71.64.

West Texas Intermediate crude futures added 8 cents, or 0.12%, bringing the price to $68.26 a barrel.

Last week saw Brent crude prices drop around 3%, while WTI fell about 5%, as concerns about demand grew following lackluster fiscal stimulus from China, the world’s second-largest economy and top oil importer.

Prices on Monday were buoyed by concerns over a potential escalation of conflict in the Middle East involving Iran, a significant oil producer and OPEC member, as Israel intensified its attacks on militant groups Hezbollah and the Houthis, both backed by Iran.

In a note, ANZ Research noted, "The recent escalation of attacks in the Middle East is increasing the likelihood of Iran being directly involved in the conflict, posing a substantial risk of supply disruptions from the OPEC producer."

On Sunday, Israel announced that it bombed Houthi targets in Yemen, expanding its confrontations with Iran’s allies following the killing of Hezbollah leader Sayyed Hassan Nasrallah two days prior amid rising tensions in Lebanon.

U.S. Defense Secretary Lloyd Austin has approved a military reinforcement in the Middle East, with the Pentagon indicating that if Iran or its proxies target U.S. personnel or interests, Washington "will take every necessary measure to defend our people."

Later on Monday, market participants will be looking for insights from Federal Reserve Chair Jerome Powell regarding the pace of monetary policy easing, with seven other Fed officials scheduled to speak this week.

Despite the current rise in prices, they remain under pressure as OPEC and its allies, known as OPEC+, plan to increase output by 180,000 barrels per day in December, and oil exports from Libya are expected to resume.