Nov 25 2024: Oil prices eased on Monday following a 6% surge last week, but they remained close to two-week highs. Rising geopolitical tensions involving major oil producers Russia and Iran heightened concerns about potential supply disruptions.
By 0440 GMT:
- Brent crude futures fell 26 cents (0.35%) to $74.91 per barrel.
- U.S. West Texas Intermediate (WTI) crude futures dropped 27 cents (0.38%) to $70.97 per barrel.
Both benchmarks posted their strongest weekly gains since late September, reaching their highest settlement levels since November 7. This followed Russia’s launch of a hypersonic missile targeting Ukraine, a warning to the U.S. and UK after Kyiv used Western-supplied weapons in strikes on Russia.
Geopolitical Risks Drive Market Sentiment
“Oil prices are beginning the week with a slight cool-off as traders await further geopolitical developments and cues from the Federal Reserve’s policy outlook,” said IG market strategist Yeap Jun Rong.
Heightened tensions between Ukraine and Russia continue to support oil prices, with Yeap noting that a potential escalation could disrupt supplies. Brent prices are expected to stay within the $70-$80 range into year-end, as Ukraine and Russia seek leverage ahead of potential negotiations under a Trump administration.
Meanwhile, Iran’s response to a U.N. nuclear watchdog resolution has added to market unease. Tehran has activated advanced uranium-enriching centrifuges, escalating the likelihood of renewed U.S. sanctions under President Trump’s upcoming term. Such sanctions could remove up to 1 million barrels per day (roughly 1% of global supply) from the market, according to Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia.
Regional Developments Add to Concerns
Iran plans to hold talks with three European powers on its nuclear program on November 29. Market analyst Priyanka Sachdeva of Phillip Nova warned of broader risks, including potential damage to oil infrastructure and the involvement of additional nations in regional conflicts.
Rising Demand in Asia
China and India, the top and third-largest oil importers globally, showed increased crude demand:
- China: November crude imports rebounded as lower prices spurred stockpiling.
- India: Refiners raised crude throughput by 3% year-on-year in October to 5.04 million barrels per day, driven by strong fuel export demand.
Upcoming Economic Data
Investors are also watching the U.S. personal consumption expenditures (PCE) data due Wednesday, which could provide insights ahead of the Federal Reserve’s policy meeting on December 17-18, Sachdeva added.
