Oil prices rose by nearly 2% on Monday on increased geopolitical risk after the fall of Syrian President Bashar al-Assad, and as top importer China flagged its first move towards a loosened monetary policy stance since 2010.
Brent crude futures were up $1.34, or 1.9%, to $72.46 per barrel at 11:25 a.m. ET (1625 GMT). U.S. West Texas Intermediate (WTI) crude futures were up $1.5, or 2.23%, to $68.70.
“Events in Syria over the weekend could impact the crude market and increase the geopolitical risk premium on oil prices in the weeks and months to come amid yet more instability in the Middle East region,” said Jorge Leon, Rystad Energy’s head of geopolitical analysis.
Syrian rebels announced on state television on Sunday they had ousted Assad, ending a 50-year family dynasty and raising fears of more instability in a region already gripped by war.
While Syria is not a major oil producer, it holds huge geopolitical clout due to its location and ties with Russia and Iran, and mixed with the tensions elsewhere in the region, the regime change has the potential to spill over into neighbouring territories, Leon said.
In early signs of disruptions in oil market, a tanker carrying Iranian oil to Syria turned round in the Red Sea to head away from its original destination, ship tracking data showed.
Meanwhile, China will step up “unconventional” counter-cyclical adjustments, focusing on expanding domestic demand and boosting consumption, state media Xinhua reported, citing a readout of a meeting of top Communist Party officials, the Politburo.
China’s growth has stalled as a slump in the property market has hit confidence and consumption. Loosening policy refers to actions by a central bank or government, such as increasing money supply, lowering interest rates, and implementing fiscal stimulus, to boost growth.
“We see a commodity price boom if China indeed follows through with the promises of looser monetary policy and the possibility that they will do whatever it takes to stimulate the economy,” said Phil Flynn, senior analyst at Price Futures Group.
China’s slowdown was a factor behind oil producers group OPEC+ last week deciding to postpone its plans for higher output until April.
Weighing on prices, top exporter Saudi Aramco on Sunday reduced its January 2025 prices for Asian buyers to their lowest level since early 2021, as markets worried it could signal weak demand. (Reuters)
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