

Market Analysis
Oil prices rose on Monday, driven by concerns that escalating conflict in the Middle East could disrupt regional supply, alongside expectations that the U.S. Federal Reserve's significant rate cut from last week would boost demand.
Brent crude futures for November gained 22 cents, or 0.3%, to $74.71 per barrel at 0705 GMT. Meanwhile, U.S. crude futures for November rose 26 cents, or 0.4%, to $71.26 per barrel.
Both benchmarks had climbed in the previous session, supported by the U.S. interest rate cut and a reduction in U.S. supply following Hurricane Francine. Last week, oil prices increased for the second consecutive week.
However, further gains were limited by a weaker economic outlook in major consumers China and the U.S.
"Geopolitical tensions between Israel and Hezbollah in the Middle East have intensified, which could keep oil prices elevated due to the risk of a broader regional conflict," said IG market strategist Yeap Jun Rong.
"That said, price gains have been more restrained, possibly reflecting some caution regarding the real impact on oil supplies, as the Middle East conflict has been ongoing for some time without major disruptions," he added.
Israel’s military conducted its largest wave of airstrikes in nearly a year against Iran-backed Hezbollah, hitting targets in southern Lebanon, the eastern Bekaa Valley, and northern areas near the Syrian border. These attacks occurred amid heavy cross-border fire, in parallel with the ongoing Israel-Hamas war in Gaza.
The conflict has escalated in recent days, particularly after the explosion of thousands of pagers and walkie-talkies used by Hezbollah members. The attack has been widely attributed to Israel, though it has not confirmed responsibility.
Despite last week's 4% rise in oil prices following the U.S. rate cut, weaker demand signals from China, the world’s largest oil importer, have tempered the upward momentum, noted Priyanka Sachdeva, senior market analyst at Phillip Nova.
"There remains uncertainty surrounding fuel demand," she said, adding that the rate cut has "sparked concerns that the Fed might be anticipating a weakening labor market."
Last Wednesday, the U.S. Federal Reserve cut interest rates by half a percentage point—more than many had predicted. While rate cuts generally stimulate economic activity and boost energy demand, some analysts worry the move could reflect the Fed's concerns over a slowing job market.
Paraphrasing text from "Reuters" all rights reserved by the original author.