Oil prices experienced a slight increase on Monday, bolstered by geopolitical tensions in Europe and the Middle East. However, the potential for increased oil supply and worries regarding the effects of trade tariffs on global fuel demand exerted downward pressure. Brent crude futures increased by 28 cents, representing a 0.42% rise, reaching $66.96 per barrel by 0118. Meanwhile, U.S. West Texas Intermediate crude stood at $62.88 per barrel, up 20 cents, or 0.32%.
“Reports over the weekend that Russia was threatening over the Polish border has provided traders with a timely reminder of the ongoing risks to European energy security from the north east,” stated Michael McCarthy. On Saturday morning, Polish and allied aircraft were mobilized to safeguard Polish airspace following Russian airstrikes aimed at western Ukraine, close to the Polish border, as reported by the armed forces of the NATO member state. The deployment followed an incident in which three Russian military jets infringed upon NATO Estonia’s airspace for a duration of 12 minutes on Friday. Additionally, on Sunday, Germany’s air force indicated that a Russian military aircraft had entered neutral airspace over the Baltic Sea.
The United Nations Security Council is scheduled to convene on Monday in response to Estonia’s allegation that Russian fighter jets breached its airspace, according to diplomats. In recent weeks, Ukraine has intensified its drone assaults on Russia’s energy infrastructure, targeting terminals and refineries. Concurrently, U.S. President Donald Trump has called on the European Union to cease its purchases of Russian oil and gas. In recent developments from the Middle East, four Western nations have acknowledged the statehood of Palestine, eliciting a strong reaction from Israel and contributing to heightened concerns in this critical oil-producing area. Brent and WTI settled down more than 1% on Friday, reflecting a modest decline over the past week. This movement was primarily driven by concerns regarding ample supplies and waning demand, which overshadowed the anticipation that the U.S. Federal Reserve’s initial interest-rate cut of the year would stimulate greater consumption.
“There are underpinning assumptions about the market outlook that encompass increased supply from the USA, OPEC+ and now Russia in response to a significant decline in oil revenues,” McCarthy stated. Iraq has raised its oil exports as it gradually unwinds voluntary production cuts in accordance with an OPEC+ agreement. Iraq’s oil exports reached an average of 3.38 million barrels per day in August, as reported by the oil ministry. SOMO anticipates that the average exports for September will fall between 3.4 million and 3.45 million bpd.