Crude oil futures experienced an uptick on Monday morning as heightened tensions in West Asia stoked fears of potential disruptions to global oil supplies.
By 9:56 AM Monday, October Brent crude futures were trading at $76.94, marking a 0.17% increase. Meanwhile, September West Texas Intermediate (WTI) futures were at $73.62, up by 0.14%.
In early trading on the Multi Commodity Exchange (MCX), August crude oil futures were priced at ₹6,182, up from ₹6,146 at the previous close, reflecting a 0.59% rise. September futures traded at ₹6,126, an increase from ₹6,091, or 0.57%.
The uptick in crude oil prices follows a weekend airstrike by Israel on two schools in Gaza, which reportedly resulted in 30 casualties. In response to escalating regional tensions, the U.S. has decided to bolster its military presence in the area. U.S. Defense Secretary Lloyd Austin has approved the deployment of additional Navy cruisers and destroyers to West Asia and Europe, capable of intercepting ballistic missiles. An additional squadron of fighter jets is also being sent to the region.
A Pentagon statement noted, “Austin has ordered adjustments to U.S. military posture designed to enhance force protection, support Israel’s defense, and ensure the U.S. is prepared to address various contingencies.”
Tensions in the region have further intensified following Iran’s vow to retaliate against Israel in response to the recent assassination of Hamas leader Ismail Haniyeh and Hezbollah commander Fuad Shukr. Market participants are concerned that further escalation could disrupt global crude oil supplies.
Despite these geopolitical concerns, crude oil prices face downward pressure from recent economic data out of the U.S. and China—two of the world’s largest oil consumers. According to ING Think’s Warren Patterson and Ewa Manthey, the oil market has seen four consecutive weeks of declines, with last week’s sell-off being the most significant since early May.
They commented, “A weaker-than-expected U.S. jobs report on Friday has heavily impacted risk assets. The data suggests a faster-than-anticipated slowdown in the U.S. economy, raising recession fears and exacerbating concerns about Chinese demand, which have been lingering in the oil market.”
Recent economic indicators include a slowdown in U.S. job growth, an increase in the unemployment rate, and decelerated wage growth. Additionally, the ISM Manufacturing PMI revealed a larger-than-expected contraction in factory activity.
In other commodity markets, August natural gas futures on the MCX were trading at ₹162.10, down 1.70% from the previous close of ₹164.90. On the National Commodities and Derivatives Exchange (NCDEX), August guargum contracts were trading at ₹10,345, down 1.64% from ₹10,517. August turmeric (farmer polished) futures were at ₹15,812, a 1.76% decrease from ₹16,096.
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