Oil prices rose marginally as geopolitical tensions flared in the Middle East while the Federal Reserve’s hawkish comments added to market uncertainties.
Brent crude hovered around $78 per barrel following a 0.9% increase on Monday while West Texas Intermediate (WTI) remained below $73.
The U.S. pledged further strikes against Iranian forces and regional proxies, heightening tensions in the already volatile region.
Israeli Prime Minister Benjamin Netanyahu emphasized the necessity of achieving absolute victory over Hamas for national security, underscoring the precarious situation in the Middle East.
Simultaneously, the financial landscape responded to remarks from Federal Reserve Chair Jerome Powell and other officials, reflecting a reduced likelihood of a rate cut in March.
The dollar surged to levels near mid-November highs, diminishing the allure of commodities for many investors.
The escalation of attacks and retaliatory threats in the Middle East contributed to a heightened risk premium on crude oil.
Despite oil’s recent worst week since October, market sentiment remained influenced by ongoing Israel-Hamas war negotiations, ample supply indications, and subdued demand from China, the world’s largest oil importer.
Saudi Arabia opted to maintain the price of its primary crude grade for March as OPEC+ upheld production cutbacks to prevent a surplus.
Fitch Ratings highlighted that the kingdom would require oil prices to exceed $90 per barrel to balance its budget this year.
Analysts anticipate OPEC+ to consider extending voluntary production cuts into the second quarter during their upcoming early March meeting, aiming to stabilize prices around the $80 per barrel mark amidst prevailing market uncertainties.
