Oil markets opened the week with gains, buoyed by increased industrial activity in China and renewed geopolitical tensions in the Middle East. China’s manufacturing expansion and rising concerns over regional supply disruptions have provided critical support to prices.
Key Developments
- Brent crude futures climbed 0.84% to reach $72.44 per barrel.
- US West Texas Intermediate (WTI) crude rose 0.88%, trading at $68.57 per barrel.
The rally followed encouraging data from China, the world’s second-largest oil consumer, showing November manufacturing activity expanding at its fastest pace in five months. This uptick reflects the effectiveness of economic stimulus measures implemented by Chinese authorities.
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Simultaneously, the fragile ceasefire in the Middle East was undermined as Israel resumed airstrikes on Lebanon, heightening concerns about potential disruptions to oil supply chains.
While both benchmarks experienced over 3% losses last week as the earlier truce between Israel and Hezbollah eased supply fears, analysts see signs of stability. The improving economic activity in China offers a glimmer of hope for sustained demand in the face of global uncertainty.
The Middle East remains a focal point for market watchers. Israel’s strikes on Lebanon resulted in injuries, according to the Lebanese Ministry of Health, while airstrikes also intensified in Syria, adding another layer of complexity to regional dynamics.
What’s Ahead
Looking to 2025, concerns over a potential oversupply loom, despite expectations that OPEC+ may extend production cuts beyond January. The oil cartel will convene this week to determine its production strategy for the months ahead. Analysts anticipate that extended cuts could help OPEC+ navigate uncertainties surrounding the newly elected Trump administration’s trade policies, which are expected to include tighter tariffs and heightened trade restrictions.
As markets remain cautious, the interplay of Chinese industrial growth, geopolitical tensions, and OPEC+ decisions will likely shape oil price movements in the coming weeks.
