In a challenging start to the week for the energy markets, oil prices faced resistance on Monday as economic uncertainties cast shadows on the global oil demand outlook. Despite rising geopolitical tensions in the Middle East and an attack on a Russian fuel export terminal over the weekend, crude oil struggled to gain momentum.
Brent crude, the international benchmark, dipped by 0.1%, or 9 cents, to $78.47 a barrel by 0353 GMT, following a 54-cent decline on Friday. Meanwhile, the front-month U.S. West Texas Intermediate (WTI) crude futures for February delivery managed a modest 11-cent increase, reaching $73.52 a barrel as the contract neared expiration on Monday. The more actively traded March WTI contract experienced a marginal decline of 4 cents, settling at $73.21 a barrel.
Despite the recent attack on a Russian fuel export terminal, allegedly carried out by a Ukrainian drone, market reactions remained muted. The incident led Russian producer Novatek to announce the suspension of some operations at the Baltic Sea terminal due to a fire. However, without a significant escalation, the oil market appears poised for rangebound trading with a hint of downward pressure.
“This morning’s subdued re-open speaks volumes about current sentiment in the crude oil market despite ongoing geopolitical tensions in Europe and the Middle East,” commented IG analyst Tony Sycamore.
The geopolitical landscape remains tense, with concerns about potential disruptions to the oil supply chain. However, the overarching influence of economic headwinds has tempered the market’s response. Analysts, including Vandana Hari, founder of oil market analysis provider Vanda Insights, anticipate that, in the absence of a major escalation, crude oil prices are likely to remain within a narrow range, facing some downward pressure.
