Dec 9 2024: Oil prices edged higher on Monday after the ousting of Syrian President Bashar al-Assad introduced fresh geopolitical uncertainty to the Middle East. However, gains were limited by concerns over declining global demand.
Brent crude futures rose by 36 cents (0.51%) to $71.48 per barrel, while U.S. West Texas Intermediate (WTI) crude futures increased by 37 cents (0.55%) to $67.57 per barrel as of 0723 GMT.
Geopolitical Tensions Boost Oil Prices
Syrian rebels announced on state television on Sunday that they had removed President al-Assad, ending a five-decade family regime. The development has heightened fears of instability in an already volatile region.
“The situation in Syria has introduced a new layer of political uncertainty, providing some support to oil prices,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting.
Demand Concerns Weigh on Market
Despite geopolitical tensions, weak demand from China and other key markets capped price increases. Saudi Aramco has reduced January 2025 crude prices for Asian buyers to their lowest since early 2021, reflecting diminished demand from the world’s largest oil importer.
Last week, OPEC+ postponed its planned production increase by three months to April 2025 and extended the timeline for fully unwinding production cuts to the end of 2026. The delay reflects concerns about weakening global demand, particularly from China.
U.S. Production and Market Outlook
The number of active U.S. oil and gas rigs reached its highest level since mid-September, signaling rising output. This, combined with a looming supply surplus, has led to consecutive weekly losses for Brent and WTI.
Investors remain cautious ahead of a U.S. inflation report and China’s economic conference this week, which are expected to provide insights into the global economic trajectory and its impact on oil demand.
China’s Economic Slowdown
China’s latest economic data showed consumer inflation hitting a five-month low in November, with factory deflation persisting. These indicators suggest limited effectiveness of measures aimed at stimulating demand, further weighing on the oil market’s outlook.
Analysts’ Perspective
According to ANZ analysts, even potential Federal Reserve rate cuts are unlikely to alleviate concerns about weakening global economic growth and its impact on oil demand, reinforcing a cautious market sentiment.
