Oil prices continued their upward momentum on Monday, marking a fifth straight session of gains, supported by easing recession fears in the U.S. and escalating geopolitical tensions in the Middle East. Last week, prices surged over 3%, and this trend persisted as Brent crude futures climbed 0.9% to $80.39 per barrel by 0812 GMT, while U.S. West Texas Intermediate (WTI) crude futures increased 1.2% to $77.72.
According to IG markets analyst Tony Sycamore, the recent U.S. economic data, which surpassed expectations, has helped alleviate concerns about a potential recession in the country. Additionally, ongoing tensions in the Middle East are contributing to the price surge. There is growing apprehension over potential retaliatory actions from Iran following the assassinations of key Hamas and Hezbollah leaders by Israel. Both Iran and Hezbollah have vowed to respond, creating a sense of inevitability in the market.
Warren Patterson, head of commodities research at ING, noted that the market is closely watching for Iran’s response, especially as Israeli military actions in Gaza escalate. Over the weekend, an Israeli airstrike on a Gaza school compound reportedly killed at least 90 people, further intensifying the conflict. Hamas, meanwhile, cast doubt on its participation in new ceasefire talks.
Brent crude gained 3.7% last week, while WTI rose by 4.5%, driven by robust economic data and heightened expectations of a U.S. interest rate cut. Last week, three U.S. central bankers indicated that inflation appears to be cooling, which could prompt the Federal Reserve to reduce interest rates as early as next month.
In other geopolitical developments, Russia evacuated civilians from parts of a second region bordering Ukraine after an increase in military activity by Kyiv, just days after Ukraine’s largest incursion into Russian territory since the 2022 conflict began.
