Oil prices rise as Assad regime falls
9 December 09:49
Oil prices rose on Monday after the fall of Syrian President Bashar al-Assad‘s regime. This introduced uncertainty about expectations in the Middle East, although the growth was limited by the forecast of lower demand for the next year, Komersant ukrainskyi reports with reference to Reuters.
Futures for Brent crude oil rose by 36 cents, or 0.51%, to $71.48 per barrel as of 09:23 Kyiv time. Futures for US West Texas Intermediate (WTI) added 37 cents, or 0.55%, to $67.57 per barrel.
The impact of the Syrian events
Syrian rebels announced on Sunday on state television the overthrow of President al-Assad, ending a 50-year family dynasty in a lightning offensive that has raised fears of a new wave of instability in a region already gripped by war.
“The developments in Syria have added a new layer of political uncertainty in the Middle East, which is providing some support to the market. However, Saudi Arabia’s price cuts and OPEC’s continued production cuts last week highlighted weak demand from China, pointing to a possible market weakening by the end of the year,”
– said Tomomiichi Akuta, Senior Economist at Mitsubishi UFJ Research and Consulting.
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Wider global context
Akuta noted that investors are watching for early signs of the impact on the markets of the expected energy and Middle East policies of US President-elect Donald Trump.
Saudi Aramco, the world’s largest crude oil exporter, has cut its January 2025 prices for Asian buyers to the lowest level since early 2021, it was announced on Sunday, as weak demand from top importer China weighs on the market.
On Thursday, the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC, postponed the start of an oil production increase by three months to April and extended the full lifting of production cuts for a year until the end of 2026.
OPEC, which is responsible for about half of the world’s oil production, had planned to start lifting the cuts in October 2024, but slowing global demand – especially from China, the world’s largest oil importer – and rising production elsewhere have forced the plan to be postponed several times.
The number of oil and gas rigs deployed in the United States last week also reached its highest level since mid-September, indicating that production in the world’s largest oil producer is rising.
With oversupply expected next year, both Brent and WTI have shown losses for the past two weeks in a row.
As prices fell, fund managers increased their net long positions in U.S. crude oil futures and options in the week to December 3, the U.S. Commodity Futures Trading Commission reported on Friday.
Expectations
Investors are gearing up for a data-heavy week, including a key U.S. inflation report on Wednesday that will provide more clues about the Federal Reserve’s plans for interest rates.
Analysts at ANZ said in a note on Monday that even additional Fed rate cuts are unlikely to ease oil market concerns about slowing global economic growth and its impact on demand.
Also this week, a conference will be held in Beijing, where policymakers are expected to determine the course of the country’s economy for 2025.
Consumer inflation in China hit a five-month low in November, while industrial deflation persisted, data showed on Monday. This indicates the limited impact of efforts to support weak economic demand.
