Oil futures experienced an up tick on Monday, primarily fuelled by renewed geopolitical tensions in the Middle East, raising concerns about potential disruptions to the region's oil supply.
Brent Crude futures rose by 0.4% to $79.16 per barrel, while U.S. West Texas Intermediate crude futures increased by 0.4% to $74.36 a barrel.
Over the weekend, a resurgence of conflict in the Middle East, particularly between Israel and Hamas in Gaza, contributed to the bullish momentum in oil prices.
Additionally, reports of three commercial vessels facing attacks in international waters in the southern Red Sea added to the concerns.
The U.S. military disclosed the incidents, with Yemen's Houthi group claiming responsibility for drone and missile attacks on two Israeli vessels.
Analysts pointed out that while these geopolitical tensions supported oil prices, uncertainties persisted due to factors such as OPEC+ voluntary output cuts and concerns about global fuel demand growth.
The Israel-Hamas conflict provided a temporary boost, but other factors, including China's slower economic recovery and increased U.S. oil production, continued to weigh on the sector.
The recent data from Baker Hughes revealed a rise in U.S. oil rigs to 505, the highest since September.
This increase added to the existing concerns about the depth of supply cuts by OPEC+ and its impact on oil prices.
Despite the temporary surge, analysts from RBC Capital, including Mike Tran, emphasized that oil prices were likely to remain volatile and directionless until clear data points regarding the voluntary output cuts were available.
Such data, they noted, would only be accessible two months later.
In the context of Russian oil, western nations intensified efforts to enforce a $60 per barrel price cap on seaborne shipments of Russian oil as a response to Moscow's actions in Ukraine.
The U.S. imposed additional sanctions on three entities and three oil tankers on Friday.
Meanwhile, the White House indicated its readiness to "pause" sanctions relief for OPEC member Venezuela in the absence of further progress on the release of Venezuelan political prisoners and Americans held in detention.
This development occurred as India resumed purchases of Venezuelan oil.