Investing.com -- Crude prices remained steady on Monday as concerns over heightened conflict in the Middle East raised worries about regional supply disruptions.
At 08:30 ET, the Brent crude oil contract was trading flat at $74.51 a barrel, while WTI futures were up 0.2% at $70.21 per barrel.
Traders are adding a risk premium to oil prices as Israel conducts strikes in Gaza and Lebanon, sparking fears of a potential all-out war in the oil-rich region.
Hezbollah has threatened retaliation against Israel following alleged attacks on their electronic devices, further escalating tensions in the region.
The ongoing conflict and the risk of a larger war in the Middle East have raised concerns about disruptions to the global oil supply, tightening markets. Crude prices have rebounded in the past two weeks due to supply fears after Hurricane Francine.
However, analysts at Bank of America have noted a bearish sentiment among energy investors, as OPEC+ plans to phase out additional voluntary output cuts, gradually increasing production from December 2024 to November 2025.
Despite weak demand in China and concerns over trade tensions and global economic slowdown, analysts believe price risks are balanced, with expectations of increased global energy consumption driven by artificial intelligence.
Bank of America analysts emphasize the importance of energy in the upcoming clash between artificial intelligence and climate change mitigation.
Analysis: The conflict in the Middle East has caused uncertainty in the oil market, leading to fluctuations in crude prices. Investors should monitor the situation closely as any escalation could impact global oil supply and prices. Additionally, the gradual increase in production by OPEC+ may offset some of the supply concerns, but bearish sentiment persists due to weak demand and economic uncertainties. Overall, the oil market remains volatile, and investors should consider diversifying their portfolios to mitigate risks in the current environment.