Global Oil Markets Find Stability Amidst Regional Tensions and Supply Dynamics

In early Tuesday trading, oil prices experienced a stabilization following a decline in the previous session. The market found itself delicately balanced between ongoing geopolitical tensions in the Middle East and growing concerns over demand, coupled with increased oil supplies from OPEC.

Brent crude futures exhibited resilience, registering a modest increase of 0.2 percent, or 18 cents, reaching $76.30 per barrel at 0122 GMT. Meanwhile, US West Texas Intermediate crude futures saw a slight uptick of 0.1 percent, or six cents, settling at $70.83 per barrel.

The dip in oil prices on Monday, with Brent falling over three percent and US crude dropping four percent, was attributed to significant price reductions by Saudi Arabia, the world’s largest oil exporter, and a surge in OPEC production.

Despite the market correction, concerns persist regarding the ongoing conflict in Gaza. The Israeli military’s commitment to continuing its fight against Hamas until 2024 raises apprehensions that the situation might escalate into a regional crisis, potentially disrupting oil supplies in the Middle East.

Addressing these concerns, US Secretary of State Antony Blinken arrived in Tel Aviv late on Monday, aiming to provide updates to Israeli officials after his two-day discussions with Arab leaders on resolving the conflict.

However, a Reuters survey on Friday revealed an increase in OPEC oil production for December. Despite ongoing cuts by Saudi Arabia and other OPEC+ members, rises in production from Angola, Iraq, and Nigeria contributed to the overall surge in supply. Consequently, Saudi Arabia responded by reducing the official selling price of its flagship Arab Light crude to Asia in February, marking the lowest level in 27 months.

Market watchers are now eagerly anticipating the release of US inventory data from the American Petroleum Institute later on Tuesday, which is expected to provide further insights into the evolving dynamics of the global oil market.