Oil prices climbed over 1% on Monday due to the ouster of Syria’s President Bashar al-Assad, which raised geopolitical risk, and China’s signals towards a loosened monetary policy stance. Brent crude futures rose by $1.02 or 1.4% to $72.14 per barrel, while U.S. West Texas Intermediate crude futures increased by $1.17 or 1.7% to $68.37.
The fall of Assad has sparked regional uncertainty and potential instability in the Middle East region, according to Jorge Leon, head of geopolitical analysis at Rystad Energy. Although Syria is not a major oil producer, its location and ties with Russia and Iran make it a significant player in the region.
China, however, is taking steps to boost economic growth by expanding domestic demand and boosting consumption. The country’s central bank or government may implement unconventional counter-cyclical adjustments, which could lead to a commodity-price boom.
The decision to loosen monetary policy comes as China’s growth has stalled due to a slump in the property market. This move has raised concerns about increased money supply, lower interest rates, and fiscal stimulus. Analysts expect this could spur demand for oil.
Additionally, OPEC+ postponed plans for higher output until April, weighing on prices. Traders are also focused on U.S. inflation data expected later this week, which could cement a December interest-rate cut by the Federal Reserve next week.
In early signs of disruptions in the oil market, a tanker carrying Iranian oil to Syria turned around in the Red Sea. This move has added to regional uncertainty and raised concerns about potential spills into neighboring territories.
Source: https://www.reuters.com/business/energy/oil-prices-mixed-rising-mideast-tensions-offset-demand-concerns-2024-12-08