Oil markets saw an uptick on Monday following Saudi Arabia’s decision to increase June crude prices for most regions and amid escalating tensions in Gaza, heightening concerns of a broader conflict in the crucial oil-producing area.
At 1300 GMT, Brent crude futures rose by 43 cents, or 0.5%, reaching $83.39 per barrel, while U.S. West Texas Intermediate crude futures stood at $78.62 per barrel, up 51 cents, or 0.7%.
Last week witnessed the sharpest weekly decline in both Brent and WTI futures in three months, with Brent dropping over 7% and WTI falling by 6.8%. Factors contributing to this decline included weak U.S. jobs data and speculation surrounding a potential Federal Reserve interest rate adjustment.
Although initial talks for a Gaza ceasefire offered some relief, the possibility of an agreement diminished as Hamas maintained its conditions for ending the conflict, while Israel indicated readiness for further military action in the southern Gaza Strip.
Israel’s military urged civilian evacuation in Rafah as part of a limited operation, fueling concerns of renewed tensions in the region.
Analyst Tony Sycamore from IG markets commented, “News of Israel’s potential extended operation in Rafah risks disrupting ceasefire prospects and reviving Middle Eastern geopolitical tensions, which had shown signs of easing.”
Additionally, oil prices found support from Saudi Arabia’s decision to raise the official selling prices (OSPs) for its crude in June, particularly for sales to Asia, Northwest Europe, and the Mediterranean, suggesting optimism about summer demand.
Meanwhile, in China, the world’s largest crude importer, service sector activity remained robust for the 16th consecutive month, with accelerated growth in new orders and improved business sentiment, signaling hopes of sustained economic recovery.
