Oil prices rose on Monday. Political uncertainty in the US and the Middle East supported prices. This offset the downward pressure from a stronger dollar.
Brent crude futures increased by 15 cents, or 0.2%, to $85.18 a barrel. US West Texas Intermediate crude rose by 20 cents, or 0.2%, to $82.41 a barrel. A failed assassination attempt on US presidential candidate Donald Trump contributed to this rise. "You cannot ignore the uncertainty this attempt creates," said IG market analyst Tony Sycamore.
In the Middle East, talks to end the Gaza conflict halted. An Israeli attack killed 90 people on Saturday. This event elevated the geopolitical premium on oil. The focus key phrase here is "oil prices rebound."
Oil markets are supported by supply cuts from OPEC+. Iraq's oil ministry will compensate for any overproduction since 2024. Last week, Brent fell more than 1.7% after four weeks of gains. WTI futures slid 1.1%.
China's crude oil imports fell 2.3% in the first half of this year. This drop in imports countered the robust summer consumption in the US. ING analysts highlighted growing demand concerns from China. Crude throughput at Chinese refineries fell 3.7% in June. China's economy slowed in the second quarter, affecting domestic demand.
In the US, the active oil rig count fell by one to 478 last week. This is the lowest count since December 2021. Baker Hughes, an energy services firm, reported this decline on Friday.
In conclusion, oil prices rebounded on Monday amid significant political uncertainties in both the US and the Middle East. These geopolitical tensions have kept the market's geopolitical premium high, despite the stronger dollar and weak demand from China. With ongoing supply cuts from OPEC+ and fluctuating global demand, the oil market remains volatile. The situation in China and the US oil rig count are critical factors to watch in the coming weeks. As always, market participants should stay informed and prepared for potential shifts in the global oil landscape.
Oil prices rebound on Monday due to political uncertainty in the US and the Middle East, offsetting the pressure.
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