Singapore, December 9, 2024: Oil prices edged higher on Monday as the removal of Syrian President Bashar al-Assad heightened geopolitical risks in the Middle East. However, gains were tempered by concerns over sluggish global demand and a looming supply surplus.
By 0723 GMT, Brent crude futures increased by 36 cents (0.51%) to $71.48 per barrel, while U.S. West Texas Intermediate (WTI) crude rose by 37 cents (0.55%) to $67.57 per barrel.
On Sunday, Syrian rebels announced on state television that they had ousted Assad, ending a 50-year family dynasty in a rapid offensive. The development has raised fears of escalating instability in a region already fraught with conflict.
“The situation in Syria adds another layer of political uncertainty in the Middle East, lending some support to oil prices,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting.
Despite geopolitical concerns, oil prices are under pressure from weakening demand. Saudi Aramco, the world’s largest crude exporter, announced on Sunday it would lower January 2025 prices for Asian buyers to their lowest levels since early 2021. The move reflects declining demand from China, the world’s top crude importer.
Last week, OPEC+—a coalition of OPEC members and allies—extended its production cut strategy, postponing planned output increases from January to April 2025 and delaying the full unwinding of cuts until the end of 2026. These adjustments come in response to faltering global demand, particularly from China, and increased production elsewhere.
The United States, the world’s largest crude producer, reported an increase in active oil and gas rigs last week, reaching their highest levels since mid-September. This signals potential growth in U.S. output.
Meanwhile, speculative activity in oil markets showed a modest recovery. Money managers increased their net long positions in U.S. crude futures and options in the week ending December 3, according to data from the U.S. Commodity Futures Trading Commission.
This week, markets are anticipating key data releases, including a U.S. inflation report on Wednesday, which could provide insight into the Federal Reserve’s interest rate trajectory. Analysts at ANZ noted that even potential Fed rate cuts are unlikely to offset concerns about global economic slowdowns and their impact on oil demand.
In China, policymakers will convene this week to outline the country’s 2025 economic strategy. However, recent data indicates continued economic challenges. Consumer inflation hit a five-month low in November, while factory deflation persisted, underscoring limited progress in stimulating demand.
Both Brent and WTI posted losses over the past two weeks, reflecting a cautious outlook amid geopolitical and economic uncertainties. As a supply surplus looms for 2025, market participants remain vigilant, balancing Middle East risks against global demand challenges.
