Key information
- Oil prices rose on Monday due to tensions between Russia and Ukraine.
- Brent oil futures rose to $73.02 per barrel, while West Texas Intermediate oil futures rose as high as $68.84 per barrel.
- Concerns over declining fuel demand in China and forecasts of a global oil surplus continue to influence market sentiment.
Oil prices rose slightly on Monday due to increased tensions between Russia and Ukraine. However, concerns over falling fuel demand in China and forecasts of a global oil surplus continue to influence market sentiment.
Brent crude futures rose nearly 3 percent to $73.02 a barrel, while U.S. West Texas Intermediate crude futures also rose nearly 3 percent. at the time of publication of this article, reaching $68.84 per barrel. Russia intensified its military operations in Ukraine over the weekend, launching its largest air attack in almost three months, which had a significant impact on the country's power grid. This escalation led to a change in US policy, with President Biden's administration now allowing Ukraine to use US-made weapons to carry out attacks inside Russian territory.
Market impact
While Russia says the move signifies direct US involvement in the conflict and an escalation of the war, some analysts believe it could lead to increased geopolitical instability and potentially impact oil markets. The possibility of further Ukrainian strikes on Russian oil infrastructure is cited as a factor likely to push up prices. Meanwhile, in Russia, several refineries have been forced to scale back operations or stop processing altogether due to substantial losses from export restrictions, rising crude prices and high borrowing costs .
Last week, Brent and WTI both fell more than 3 percent on weak economic data from China, the world's second-largest oil consumer. The International Energy Agency also estimated that in 2025, global oil supply will exceed demand by more than a million barrels per day, despite continued production cuts by OPEC+. Chinese refinery output fell 4.6 percent in October from a year earlier and industrial production growth slowed last month, further increasing market concerns.
Global economic uncertainty
Investor concerns are also fueled by uncertainty surrounding the pace and scale of interest rate cuts by the U.S. Federal Reserve, which has created volatility in global financial markets.
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