Rising tensions in Middle East push WTI to $71.50

The benchmark West Texas Intermediate (WTI) continues to gain ground, trading around $71.50 in Asian markets on Monday, as crude oil prices rise on concerns over potential supply disruptions and escalating tensions in the Middle East.

Hezbollah and Israel engaged in heavy exchanges of fire on Sunday, with the Lebanese militant group launching missiles deep into northern Israeli territory following intense bombardment — some of the most severe in nearly a year of conflict, according to CNN.

On Saturday, Israel conducted approximately 300 strikes on Hezbollah positions, describing the actions as preemptive measures to prevent a planned attack. In response, Hezbollah fired a barrage of rockets and missiles into Israel, asserting that it was retaliating for Israeli strikes in Lebanon.

Expectations are that the US Federal interest rate cut last week will support crude oil demand.

Lower borrowing costs may support in growing economic activities in the world’s largest oil consumer U.S., which could improve oil demand. Fed policymakers predict an additional 75 basis points (bps) of rate cuts in 2024, following an aggressive 50 bps rate cut to a 4.75-5.00% range last week.

According to a Reuters report on Sunday, Shell plans to shut down production at its Stones and Appomattox facilities in the Gulf of Mexico as a precautionary measure due to a tropical disturbance.

Shell stated, “we are in the process of safely pausing some of our drilling operations and currently have no other impact on our production across the Gulf of Mexico.”

(Source: OANDA)