Global crude oil prices edge up as geopolitical tensions intensify

WEB DESK: Global oil prices rose slightly on Monday following increased fighting between Russia and Ukraine over the weekend.

However, concerns about weak fuel demand in China, the world’s second-largest oil consumer, and predictions of a global oil surplus kept the markets under pressure.

Brent crude futures increased by 20 cents, or 0.3 per cent, reaching $71.24 per barrel by 01:30 GMT.

Meanwhile, US West Texas Intermediate (WTI) crude futures went up 9 cents, or 0.1 per cent, to $67.11 per barrel.

In a significant shift, the Biden administration has now permitted Ukraine to use US-made weapons for strikes deep into Russian territory, according to US officials. This marks a change in Washington’s stance on the conflict.

The Kremlin has not yet responded but previously warned that expanding Ukraine’s use of US weapons would be seen as a major escalation.

Tony Sycamore, an analyst at IG Markets, commented, “Biden’s decision to allow Ukraine to target Russian forces around Kursk with long-range missiles may bring geopolitical concerns back into oil markets, as tensions are rising, especially with North Korea’s involvement.”

On Sunday, Russia launched its largest airstrike on Ukraine in nearly three months, causing significant damage to the country’s power infrastructure.

Meanwhile, in Russia, at least three refineries have either halted operations or reduced production due to heavy losses caused by export restrictions, rising crude prices, and high borrowing costs, according to industry sources.

Last week, Brent and WTI fell by over 3 per cent, affected by weak Chinese economic data and a forecast from the International Energy Agency that global oil supply will exceed demand by more than 1 million barrels per day by 2025, despite ongoing OPEC+ production cuts.

China’s refinery output dropped by 4.6 per cent in October compared to last year, while its factory output also slowed, according to government data released on Friday.

Investors are also concerned about the timing and scale of potential interest rate cuts by the US Federal Reserve, which has added uncertainty to global financial markets.

In the US, the number of active oil rigs dropped by one to 478 last week, marking the lowest count since mid-July, according to Baker Hughes.

Read next: Global oil prices fall amid rising US crude inventories