Oil prices rose on Monday following the ousting of Syrian President Bashar al-Assad, which added political uncertainty to the Middle East. However, the gains were limited by a weak demand outlook for the coming year.
Brent crude futures increased by 36 cents, or 0.51%, to $71.48 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 37 cents, or 0.55%, to $67.57 per barrel.
Syrian rebels announced on Sunday that they had ousted President al-Assad, ending a 50-year family dynasty in a swift offensive. This development raised concerns about further instability in the already war-torn region, providing some support for oil prices. Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting, noted that the political turmoil in Syria added uncertainty, which helped the market.
However, concerns about weak global demand capped the price rise. Saudi Arabia’s price reductions and OPEC+’s decision to extend production cuts last week highlighted weak demand from China, the world’s top oil importer, signaling that the market may soften as the year ends.
Saudi Aramco, the world’s largest oil exporter, reduced its January 2025 prices for Asian buyers to their lowest since early 2021 due to weak demand from China. OPEC+ also delayed its planned increase in oil output by three months, now scheduled for April, and extended production cuts until the end of 2026.
The U.S. also saw an increase in oil and gas rigs, signaling higher output, which could contribute to a supply surplus next year. Despite this, both Brent and WTI oil prices have posted losses over the last two weeks.
Investors are closely watching economic data this week, including a key U.S. inflation report that may offer insights into the Federal Reserve’s interest rate decisions. Analysts from ANZ noted that even with potential rate cuts by the Fed, concerns about slowing global economic growth and its impact on oil demand remain a major factor for the market.
Additionally, China’s consumer inflation hit a five-month low in November, and factory deflation continued, suggesting that efforts to boost economic demand are having limited effect. China is set to hold an important economic policy conference this week to chart its economic direction for 2025.
