Oil prices rose on Monday, paring losses from last week on fears of a wider Middle East conflict following a rocket attack on the Israeli-occupied Golan Heights that Israel and the US blamed on the Lebanese armed group Hezbollah.
Brent crude futures rose 40 cents, or 0.5%, to $81.53 a barrel by 0650 GMT. WTI oil futures rose 34 cents, or 0.4%, to $77.50 a barrel.
Brent fell 1.8% last week, while WTI fell 3.7% on weakening Chinese demand and hopes for a ceasefire in Gaza.
Hezbollah has denied responsibility for the attack on the Golan Heights, the deadliest attack in Israel or annexed territory since Hamas’ October 7 offensive sparked the war in Gaza. The conflict has spread across multiple fronts and risks escalating into a wider regional conflict.
Israel has vowed retaliation against Hezbollah in Lebanon, and Israeli jets struck targets in southern Lebanon on Sunday.
While hopes for a ceasefire in Gaza have gained momentum in the past few weeks, concerns about rising tensions in the Middle East have led to new purchases. Still, the gains have been limited by concerns about weakening demand in China.
But Israel wants changes to the Gaza ceasefire and Hamas’ plan to release hostages, complicating any agreement to end the nine-month conflict that has devastated the region, according to a Western official, a Palestinian, and two Egyptian sources.
On the demand side, data released earlier this month showing China’s total fuel oil imports falling 11% in the first half of 2024 has raised concerns about the broader demand outlook for the Asian giant, the world’s largest importer of crude oil.
Demand concerns continue to be a major factor influencing crude prices. Economic growth in China slowed in the second quarter, while domestic consumer demand was subdued.
The Fed’s interest rate decision and China’s manufacturing PMI are the next key events for markets trying to gauge the oil market’s direction.
Meanwhile, U.S. energy companies added oil and gas rigs for the second week in a row, adding the monthly number by the most since November 2022.
Markets are also watching oil producer Venezuela after President Nicolas Maduro won a third term with 51% of the vote.
The U.S. has previously said it will “calibrate” its sanctions policy against Venezuela depending on how the high-stakes elections in the OPEC country play out. US Secretary of State Antony Blinken said the US had serious concerns that the results did not reflect the popular vote.
