Oil prices rose on Monday, rebounding from sharp declines last week after Washington pledged to launch further strikes on Iran-backed groups in the Middle East and after Ukrainian drones hit the refinery largest at Volgograd in Russia.
Brent crude futures were up 26 cents, or 0.3%, at $77.59 a barrel by 07:09 GMT, while WTI futures were up 13 cents, or 0.2%, at $72.41 a barrel.
Both indicators closed last week down around 7 percent after stronger-than-expected US employment data showed that interest rate cuts may be further away than expected and progress could be made in ceasefire negotiations between Israel and Hamas.
Hopes for a ceasefire between Israel and Hamas triggered this decline, but for now, a ceasefire also does not appear imminent.
Investors remain wary of an escalation of conflict in the Middle East after the United States signaled a greater response in response to a deadly attack on US troops in Jordan.
The United States has also continued its campaign against the Houthis in Yemen, whose attacks on shipping vessels have disrupted global oil trade routes, although they have not greatly affected supplies.
Given that the United States has refrained from attacking Iran directly, Israel-Hamas ceasefire talks are likely to have a more dominant impact, thus reducing Middle East tensions.
Oil markets will likely respond by continuing to reduce supply disruption risks in the Middle East, which will likely keep Brent futures below $80 a barrel.
The U.S. Justice Department on Friday seized more than 520,000 barrels of Iranian oil aboard the crude tanker Abyss, which was anchored in the Yellow Sea en route to China and is the subject of sanctions linked to an oil smuggling network that Iran says funds the Islamic Revolutionary Guard Corps.
Iran’s budget targets oil sales of 1.35 million barrels per day for each year starting in March 2024; This is approximately 1.3% of the 103.5 million barrels per day global supply estimated by the International Energy Agency (IEA).
According to a source from Kyiv, two Ukrainian attack planes hit the largest oil refinery in the south of the country in Russia on Saturday. However, Lukoil, which owns the 300,000 barrel-per-day Volgograd refinery, later said the plant operated normally.
In the US, BP is opening a new 435,000-barrel-per-day oil refinery in Indiana. BP’s Whiting refinery, which had been without power, was restarted at noon on Friday, but sources said BP has not yet set a date for the plant’s restart.
