WTI holds position near $69.00 due to rising supply fears AND conflict over Middle-East

• WTI price may appreciate amid rising supply fears following recent Israel’s attacks on Iranian-backed militant groups.
• The escalation of attacks in the Middle East is increasing the likelihood of Iran involving directly in the conflict.
• Oil prices might have received downward pressure following the mixed Manufacturing PMI data from China.

The price of West Texas Intermediate (WTI) oil remains at approximately $69.20 per barrel during the Asian hours of Monday. Nevertheless, crude oil prices may increase in response to the increasing apprehension regarding potential supply disruptions in the Middle East as a result of Israel’s intensified attacks on Iranian-backed militant groups Hezbollah and the Houthis. Fears of instability in the region may result from these geopolitical tensions, which could potentially affect the supply of oil and drive prices higher.
According to Reuters, ANZ Research has observed that the recent escalation of attacks in the Middle East is increasing the probability of Iran, a significant producer and member of the Organization of the Petroleum Exporting Countries (OPEC), becoming directly embroiled in the conflict.
On Sunday, Israel disclosed that it had conducted airstrikes against Houthi targets in Yemen, thereby expanding its conflict with Iran’s allies. This action serves as a response to the assassination of Hezbollah leader Sayyed Hassan Nasrallah two days prior, which has further escalated the ongoing conflict in Lebanon.

As a result of the mixed Manufacturing Purchasing Managers’ Index (PMI) data from China, the world’s largest petroleum importer, oil prices may have received downward pressure. In September, the Caixin Manufacturing Purchasing Managers’ Index (PMI) in China decreased from 50.4 in August to 49.3, which suggests a contraction. In September, China’s NBS Manufacturing Purchasing Managers’ Index (PMI) increased to 49.8, surpassing the market consensus of 49.5 and increasing from 49.1 in the previous month.

Furthermore, oil merchants are closely monitoring the most recent monetary measures in China, which are designed to increase energy demand and stimulate economic activity. China announced last week that it would inject more than CNY 1 trillion in capital into its largest state banks, despite the fact that they are currently confronting numerous challenges. This significant capital infusion would be the first of its kind since the 2008 global financial crisis.

Nevertheless, crude oil prices may encounter obstacles as a result of Saudi Arabia’s intention to augment production later this year and OPEC+’s decision to increase output by 180,000 barrels per day in December. A report from the Financial Times, which cited unnamed sources familiar with the country’s plans, suggested that Saudi Arabia is dedicated to resuming production on December 1, regardless of the potential for reduced prices.