Oil prices kicked off the week on an upward trajectory after rebels ousted the 43-year rule of President Bashar al-Assad and his father, Hafez al-Assad. The prospect of civil war has fueled concerns over heightened tensions in the Middle East, raising the risk of supply chain disruptions.
Key Figures
- Brent crude rose 0.52% to $71.49 per barrel.
- US light crude climbed 0.58% to $67.59 per barrel.
These movements followed the seizure of Damascus by Hayat Tahrir al-Sham, a radical rebel group, on Sunday. This marked the end of 50 years of Assad family rule, raising fears of a possible escalation into civil war.
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The oil market’s upward trend comes after two consecutive weeks of losses for both Brent and US light crude, driven by growing expectations of oversupply in 2025.
Market Constraints
Despite the rise in prices, broader market sentiment remains weighed down by weak demand in China, the world’s second-largest economy. This prompted Saudi Aramco, the world’s top crude exporter, to slash its January 2025 prices for the Asian market to the lowest level since early 2021.
OPEC+ Strategy Shift
In a move that surprised markets, OPEC+ postponed its planned production increase for January by an entire year, rather than the previously expected three months. OPEC+ controls about 50% of global oil production, and the group had initially planned to ramp up production from October 2024. However, slowing demand, especially from China, along with rising output from other producers, forced multiple delays to the increase.
With the global energy market still under pressure from weak demand, the cartel’s decision signals a shift toward a more cautious production strategy to maintain price stability.
