Oil Prices Rise Amid Geopolitical Tensions and Market Factors
Oil prices experienced an increase of over 1% on Monday due to growing concerns about potential supply disruptions stemming from intensified airstrikes between Russia and Ukraine, alongside a weaker dollar providing additional support to benchmark prices.
Market Reactions
- Brent crude futures increased by 1%, reaching $68.18 per barrel.
- U.S. West Texas Intermediate (WTI) crude futures rose by 1.2%, achieving $64.77 per barrel.
- Trading activity was expected to be subdued due to a U.S. public holiday.
Geopolitical Developments
- Ukrainian President Volodymyr Zelenskiy vowed retaliation against Russian drone strikes on power facilities.
- Both Russia and Ukraine have escalated airstrikes, although efforts to resolve the conflict continue.
- Weekly Russian oil shipments dropped to a four-week low of 2.72 million barrels per day (bpd).
Global Economic Factors
- The U.S. labor market report was anticipated to provide insights into economic health, influencing interest rate expectations.
- The dollar was close to a five-week low, potentially affecting oil prices by making them cheaper for buyers using other currencies.
International Engagements
- A regional summit in Beijing included key leaders: Xi Jinping, Vladimir Putin, and Narendra Modi.
- China's manufacturing activity expanded at its fastest pace in five months, supporting oil and copper prices.
OPEC+ Considerations
- An OPEC+ meeting on September 7 was highlighted as a pivotal event for determining future output targets.
- Analysts anticipated a potential increase in oil inventories towards the end of 2025 and early 2026.
- Increased OPEC+ supply could exert downward pressure on oil prices, following the first monthly decline in four months during August.
