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Oil prices continued their upward trajectory in early Asian trade on Monday, building on gains from the previous week driven by expectations of tightened supplies and heightened geopolitical tensions.
Brent Crude Futures Climb, Extending Last Week’s Gains
Brent crude futures for May delivery edged up three cents to $85.37 a barrel by 0045 GMT, reflecting the market’s optimism following last week’s approximately four percent surge in prices. Similarly, April contracts for US West Texas Intermediate crude rose ten cents to $81.14 a barrel, indicating sustained bullish sentiment in the oil market.
Geopolitical Concerns Heighten with Ukrainian Drone Campaign
ANZ analysts highlighted ongoing geopolitical tensions, particularly the intensified Ukrainian drone campaign targeting Russian oil refineries over the weekend. Saturday’s attacks, including one that sparked a fire at the Slavyansk refinery in Kasnodar, underscore the potential disruptions to global oil supply chains, adding further impetus to oil price appreciation.
Israeli-Palestinian Tensions Compound Market Uncertainty
In the Middle East, tensions between Israel and Palestine escalated as Israeli Prime Minister Benjamin Netanyahu reaffirmed plans to invade Rafah in the southern Gaza Strip. This provocative move, amidst international pressure to de-escalate the conflict, threatens to exacerbate regional instability. German Chancellor Olaf Scholz’s warning of the detrimental impact on peace efforts further underscores the geopolitical risks influencing oil market dynamics.
As oil prices continue to respond to supply-side dynamics and geopolitical developments, market participants remain vigilant. Uncertainty surrounding global oil supply chains, exacerbated by geopolitical tensions in key regions, underscores the importance of monitoring evolving events for their potential impact on oil market stability.
