Oil prices rebounded on Monday, settling nearly 2% higher after last week’s significant losses. Brent crude futures rose by $1.23 (1.68%) to $74.29 per barrel, while U.S. West Texas Intermediate (WTI) futures increased by $1.34 (1.94%) to $70.56 per barrel. These gains come after both benchmarks dropped over 7% last week, their largest weekly losses since early September, largely due to concerns over slowing economic growth in China and diminished geopolitical risk premiums in the Middle East. Israel’s military operations in Gaza and targeted strikes in Lebanon, alongside fears of potential Israeli retaliatory actions against Iran, fueled concerns about regional oil supply disruptions. U.S. officials, including Secretary of State Antony Blinken, are pushing for ceasefire negotiations in an attempt to defuse escalating conflicts in Gaza and Lebanon. Meanwhile, China’s efforts to stimulate its economy, including cutting benchmark lending rates, have been met with skepticism regarding their impact on oil demand. The country’s oil demand is expected to remain weak, even with these measures, due to the transition to electric vehicles and slower economic growth. However, Saudi Aramco’s CEO remains optimistic, citing demand for jet fuel and chemicals.
In the U.S., rising crude production—reaching a record 13.5 million barrels per day—and possible rate cuts by the Federal Reserve are additional factors impacting the market. Lower interest rates could boost economic activity, which in turn might drive up oil demand.