Oil gains as Assad’s fall increases Middle East uncertainty
Ousting of 50-year family dynasty raises fear of a new wave of instability in a region already gripped by war
09 December 2024 - 07:58
byYuka Obayashi and Siyi Liu
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Tokyo/Singapore — Oil prices climbed on Monday after the fall of Syrian President Bashar al-Assad’s regime introduced greater uncertainty to the Middle East, though the gains were capped by a waning demand outlook for the coming year.
Brent crude futures rose 36c, or 0.51%, to $71.48 a barrel by 5.13am GMT. US West Texas Intermediate (WTI) crude futures gained 38c, or 0.57%, to $67.58 a barrel.
Syrian rebels announced on state television on Sunday they had ousted Assad, eliminating a 50-year family dynasty in a lightning offensive that raised the fear of a new wave of instability in a region already gripped by war.
“The development in Syria has added a new layer of political uncertainty in the Middle East, providing some support to the market,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting.
“But Saudi Arabia’s price reductions and Opec+’s production cut extension last week underscored weak demand from China, indicating the market may soften towards year-end,” he said, noting that investors are watching for early signs of any impact on the markets from US president-elect Donald Trump’s expected energy and Middle East policies.
Saudi Aramco, the world’s biggest crude oil exporter, has reduced its January 2025 prices for Asian buyers to the lowest level since early 2021, it said on Sunday, as weak demand from top importer China weighs on the market.
On Thursday, oil cartel Opec and its allies, a group known as Opec+, pushed back the start of oil output increases by three months until April, and extended the full unwinding of production cuts by a year until the end of 2026.
Opec+, responsible for about half of the world’s oil output, was planning to start unwinding cuts from October 2024, but a slowdown in global demand — especially from top crude importer China — and rising output elsewhere have forced it to postpone the plan several times.
The number of oil and gas rigs deployed in the US last week also hit the highest since mid-September, pointing to rising output from the world’s biggest crude producer.
With a supply surplus looming next year, both Brent and WTI posted losses for the past two consecutive weeks.
As prices slid, money managers raised their net long US crude futures and options positions in the week to December 3, the US Commodity Futures Trading Commission said on Friday.
Investors are bracing for a data-packed week, including a key US inflation report on Wednesday that will provide more clues for the Federal Reserve’s plans for interest rates.
ANZ analysts said in a note on Monday that even additional Fed rate cuts are unlikely to alleviate oil market concerns about weakening global economic growth and its impact on demand.
Also, Beijing will host a conference this week where policymakers are expected to chart the course for the country’s economy in 2025.
China’s consumer inflation hit a five-month low in November while factory deflation persisted, data showed on Monday, suggesting efforts to shore up faltering economic demand are having limited effect.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil gains as Assad’s fall increases Middle East uncertainty
Ousting of 50-year family dynasty raises fear of a new wave of instability in a region already gripped by war
Tokyo/Singapore — Oil prices climbed on Monday after the fall of Syrian President Bashar al-Assad’s regime introduced greater uncertainty to the Middle East, though the gains were capped by a waning demand outlook for the coming year.
Brent crude futures rose 36c, or 0.51%, to $71.48 a barrel by 5.13am GMT. US West Texas Intermediate (WTI) crude futures gained 38c, or 0.57%, to $67.58 a barrel.
Syrian rebels announced on state television on Sunday they had ousted Assad, eliminating a 50-year family dynasty in a lightning offensive that raised the fear of a new wave of instability in a region already gripped by war.
“The development in Syria has added a new layer of political uncertainty in the Middle East, providing some support to the market,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting.
“But Saudi Arabia’s price reductions and Opec+’s production cut extension last week underscored weak demand from China, indicating the market may soften towards year-end,” he said, noting that investors are watching for early signs of any impact on the markets from US president-elect Donald Trump’s expected energy and Middle East policies.
Saudi Aramco, the world’s biggest crude oil exporter, has reduced its January 2025 prices for Asian buyers to the lowest level since early 2021, it said on Sunday, as weak demand from top importer China weighs on the market.
On Thursday, oil cartel Opec and its allies, a group known as Opec+, pushed back the start of oil output increases by three months until April, and extended the full unwinding of production cuts by a year until the end of 2026.
Opec+, responsible for about half of the world’s oil output, was planning to start unwinding cuts from October 2024, but a slowdown in global demand — especially from top crude importer China — and rising output elsewhere have forced it to postpone the plan several times.
The number of oil and gas rigs deployed in the US last week also hit the highest since mid-September, pointing to rising output from the world’s biggest crude producer.
With a supply surplus looming next year, both Brent and WTI posted losses for the past two consecutive weeks.
As prices slid, money managers raised their net long US crude futures and options positions in the week to December 3, the US Commodity Futures Trading Commission said on Friday.
Investors are bracing for a data-packed week, including a key US inflation report on Wednesday that will provide more clues for the Federal Reserve’s plans for interest rates.
ANZ analysts said in a note on Monday that even additional Fed rate cuts are unlikely to alleviate oil market concerns about weakening global economic growth and its impact on demand.
Also, Beijing will host a conference this week where policymakers are expected to chart the course for the country’s economy in 2025.
China’s consumer inflation hit a five-month low in November while factory deflation persisted, data showed on Monday, suggesting efforts to shore up faltering economic demand are having limited effect.
Reuters
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