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Brent crude surpassed $80 per barrel for the first time since August, rising 3.7% amid escalating Middle East tensions. The surge comes after concerns over potential oil supply disruptions in the region.
Brent crude prices surged above $80 per barrel on Monday, marking the first time since August 2024. The rise was driven by heightened geopolitical risks following increased tensions in the Middle East, particularly concerning the conflict between Israel and Iran. Brent crude futures settled at $80.93 per barrel, reflecting a 3.7% increase, while U.S. West Texas Intermediate (WTI) futures also saw a 3.7% rise, settling at $77.14 per barrel.
The recent escalation in the Middle East has raised concerns among investors about potential disruptions to oil supply from the region. Iran's missile strikes and the conflict between Israel and Hezbollah have intensified fears of a wider regional war, which could jeopardise oil production, particularly Iran's 3.4 million barrels per day. These developments have prompted a sharp increase in oil prices as investors move to cover bearish positions.
Last week alone, Brent crude saw an 8% rise, while WTI surged by 9%, marking the largest weekly gain in over a year. The current geopolitical situation has put additional upward pressure on oil prices, with market participants anticipating further volatility in the coming days.
Hedge funds and money managers have played a significant role in this price rally, closing their bearish bets on oil as concerns over Middle Eastern supply disruptions intensified. This shift in market sentiment has fuelled the recent spike in Brent crude prices, despite ongoing concerns about weak global demand, particularly from China, the world's largest crude importer.
While the fear of supply disruptions has driven prices higher, analysts remain cautious about the sustainability of this rally. Any de-escalation of the conflict could result in a pullback in oil prices.
Looking ahead, the Organisation of Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are expected to raise production starting in December. However, analysts suggest that Brent crude prices will need to remain above $90 per barrel for OPEC+ to act on increasing supplies.
Brent crude's rise to $80 per barrel highlights the sensitivity of global oil markets to geopolitical risks. As tensions in the Middle East persist, investors will closely monitor further developments that could impact the Brent share price and global oil supply.
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