Oil prices edged higher on Monday, fuelled by fears of potential supply disruptions from the Middle East, following Israel's intensified attacks on Iranian-backed forces.
Brent crude futures for November delivery rose 49 cents, or 0.7%, to $72.47 a barrel as of 1:10 pm AEST (3:10 am GMT). U.S. West Texas Intermediate (WTI) crude futures also gained 45 cents, or 0.7%, reaching $68.64 a barrel.
Despite a 3% drop in Brent and a 5% decline in WTI last week - due to concerns over weaker demand after China’s fiscal stimulus failed to bolster market confidence - oil prices found support on Monday from the possibility of further conflict in the Middle East.
Iran, a key member of the Organisation of the Petroleum Exporting Countries (OPEC), could face disruptions as Israel continues its military actions against Iranian-backed Hezbollah and Houthi forces.
Israel expanded its operations on Sunday, targeting Houthi positions in Yemen just days after the killing of Hezbollah leader Sayyed Hassan Nasrallah in Lebanon. The conflict threatens to destabilise oil flows from the region.
In response, U.S. Defense Secretary Lloyd Austin has authorised additional military presence in the Middle East. The Pentagon warned that any attacks by Iran or its proxies on U.S. personnel or interests would be met with force.
Traders will also be looking to Federal Reserve Chair Jerome Powell's comments later on Monday for insights into the U.S. central bank's monetary policy plans. Seven other Fed policymakers are scheduled to speak this week, providing further indications of the Fed's approach to potential rate cuts.
However, oil prices remain under pressure as OPEC+ plans to increase output by 180,000 barrels per day in December, with Libyan oil exports expected to resume soon.
