Brent crude oil prices surged past the $80 per barrel mark on Monday for a fifth consecutive day of gains as a combination of eased U.S. recession fears and heightened geopolitical tensions in the Middle East provided robust support to the market.
Brent crude oil, against which Nigerian oil is priced, was up 70 cents, or 0.9% to $80.36 a barrel.
Similarly, U.S. West Texas Intermediate (WTI) crude saw an increase of 84 cents, or 1.1%, reaching $77.68 per barrel.
The rally in oil prices comes on the heels of a strong performance last week, during which Brent gained more than 3% and WTI rose by 4.5%.
Analysts attribute the continued upward momentum to improving economic indicators in the United States, which have alleviated concerns about a potential recession in the world’s largest economy.
“Support is coming from last week’s better-than-expected U.S. data, which eased fears of a U.S. recession,” said Tony Sycamore, a market analyst at IG Markets. “The market is responding positively to signs of economic resilience, which in turn has bolstered demand expectations for oil.”
Adding to the bullish sentiment, geopolitical risks in the Middle East have intensified.
Tensions between Iran and Israel are escalating, with analysts expressing concern about potential disruptions in the region’s oil supply.
Iran has vowed retaliation following the assassinations of key leaders from Hamas and Hezbollah, raising fears of further instability in the region.
“There is a great deal of anxiety about when Iran might look to avenge Israel’s actions. It feels like a matter of when, not if,” Sycamore added.
Meanwhile, ongoing conflicts in the Middle East continue to contribute to the uncertainty. Over the weekend, the Israeli military intensified its operations in Gaza, leading to significant casualties and further complicating the prospects for peace in the region.
The situation has kept the market on edge, with traders closely monitoring any developments that could impact oil flows.
Despite the current upward trend, the Organization of the Petroleum Exporting Countries (OPEC) recently revised its forecast for global oil demand growth in 2024.
The cartel cited weaker-than-expected data from the first half of the year and softer economic expectations for China as reasons for the downgrade.
OPEC’s more cautious outlook has tempered some of the optimism in the market, though the immediate concerns about supply disruptions have kept prices buoyant.
In the U.S., economic data released last week showed that inflation appeared to be cooling, prompting speculation that the Federal Reserve might be inclined to cut interest rates sooner rather than later.
Such a move would likely support economic growth, further boosting demand for oil.
“The market is still waiting for Iran’s response,” said Warren Patterson, head of commodities research at ING. “But in the meantime, the economic data is providing a solid floor for prices.”
