By John Ikani
Oil prices continued to rise on Monday, with Brent crude nearing $80 per barrel, building on the previous week’s significant surge—its biggest increase since early 2023. Concerns about a broader conflict in the Middle East and possible disruptions to exports from the oil-rich region have driven these gains.
By 1316 GMT, Brent crude futures had risen by $1.09, or 1.4%, reaching $79.14 a barrel. U.S. West Texas Intermediate (WTI) crude futures were also up $1.15, or 1.55%, at $75.53, after earlier climbing by more than $2.
“Brent crude is back to challenge $80, with activity in the options market showing increased demand for hedging the risk of further gains amid worries about a minor or, in the worst case, major supply disruption from the Middle East,” said Ole Hansen, head of commodity strategy at Saxo Bank, in a note.
Last week, Brent shot up by more than 8%, while WTI gained 9.1%, largely due to concerns that Israel might respond to Iran’s missile attack on October 1 by targeting Iranian oil facilities.
On Monday, rockets launched by Hezbollah, an Iran-backed group, hit Haifa, Israel’s third-largest city. At the same time, Israel appeared set to escalate ground operations in southern Lebanon, marking the anniversary of the Gaza war—a conflict that has since spread across the region.
The situation has sparked fears that the United States, Israel’s powerful ally, and Iran, its regional rival, could be drawn into a wider confrontation.
However, ANZ Research predicted that any immediate impact on oil supply would likely be minimal.
“We see a direct attack on Iran’s oil facilities as the least likely response among Israel’s options,” the research firm commented, citing OPEC’s ability to supply an additional 7 million barrels per day as a buffer.
OPEC, along with its allies, including Russia, known as OPEC+, is set to boost oil production starting in December, after years of curbing output to support prices due to sluggish global demand.
Although OPEC+ has sufficient capacity to counter any loss of Iranian oil, analysts warn that if Iran retaliates by striking facilities in neighbouring Gulf states, the situation could become more complicated.
At the onset of last year’s Middle East unrest, Brent crude was trading at $88.15 a barrel.
“While the emotional toll of the conflict on the oil sector is significant, broader economic factors have dampened expectations for a surge in global demand,” said John Evans, from oil brokerage PVM.
