By Katya Golubkova
TOKYO (Multibagger) - Oil prices inched up on Monday amid growing concerns of supply disruptions from the Middle East as Israel intensified attacks on Iranian-backed forces.
Crude futures for November delivery rose 16 cents to reach $72.14 a barrel, while the more-active December contract gained 10 cents to hit $71.64. U.S. West Texas Intermediate crude futures also saw a slight increase, adding 8 cents to reach $68.26 a barrel.
Despite last week's dip in prices, with Brent falling around 3% and WTI around 5%, the current uptick is fueled by fears of a broader conflict in the Middle East involving Iran, a key OPEC member. Israel's heightened attacks on Hezbollah and the Houthi, both backed by Iran, have raised concerns about potential disruptions in oil supply.
According to ANZ Research, the recent escalation in the region increases the risk of Iran being directly involved in the conflict, posing a threat to OPEC's production.
Israel's recent bombing of Houthi targets in Yemen and the killing of Hezbollah leader Sayyed Hassan Nasrallah have further escalated tensions. The U.S. has authorized military reinforcement in the region, vowing to defend its interests against any threat from Iran or its allies.
Later today, markets will be eagerly awaiting remarks from Federal Reserve Chair Jerome Powell for insights into the Fed's monetary policy stance. Additionally, seven other Fed policymakers are scheduled to speak this week.
However, despite the current geopolitical tensions, oil prices continue to face pressure from OPEC+ plans to increase output in December and the expected resumption of oil exports from Libya.
Analysis: The recent spike in oil prices is driven by escalating tensions in the Middle East, particularly involving Iran and its allies. This geopolitical risk has the potential to disrupt global oil supply chains, leading to price volatility in the energy markets. Investors should closely monitor developments in the region and factor in these risks when making investment decisions related to oil and energy stocks.