Oil prices rose on Monday following the fall of Syrian President Bashar al-Assad‘s regime, an event that heightened uncertainty in the Middle East. However, the gains were limited by expectations of weakening demand in the coming year.
Brent crude futures increased by 36 cents, or 0.51%, to $71.48 per barrel as of 0513 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures climbed 38 cents, or 0.57%, to $67.58 per barrel.
On Sunday, Syrian rebels announced on state television that they had successfully ousted President al-Assad, ending a 50-year family rule in a swift offensive. This development has sparked concerns about further instability in a region already affected by ongoing conflicts.
“The development in Syria has added a new layer of political uncertainty in the Middle East, providing some support to the market,” stated Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting.
“But Saudi Arabia’s price reductions and OPEC+’s production cut extension last week underscored weak demand from China, indicating the market may soften toward year-end,” he added.
Akuta also noted that investors are monitoring potential market impacts from U.S. President-elect Donald Trump’s anticipated energy and Middle East policies.
Saudi Aramco, the world’s largest crude oil exporter, announced on Sunday it had cut January 2025 prices for Asian buyers to their lowest level since early 2021, citing weak demand from China, the top global oil importer.
Last Thursday, the Organisation of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, deferred the start of oil output increases by three months to April 2025 and extended the timeline for fully unwinding production cuts until the end of 2026.
Initially, OPEC+ planned to begin unwinding cuts in October 2024, but slowing global demand—particularly from China—and rising production elsewhere have led to multiple delays.
In the U.S., the number of active oil and gas rigs rose last week to the highest levels since mid-September, signaling increased production in the world’s largest crude producer.
Despite Monday’s slight uptick, Brent and WTI both recorded losses over the past two consecutive weeks due to looming concerns of a supply surplus in the coming year.
As prices declined, money managers increased their net long U.S. crude futures and options positions during the week ending December 3, according to the U.S. Commodity Futures Trading Commission.
This week, investors are bracing for critical economic data, including a U.S. inflation report on Wednesday, which could provide insights into the Federal Reserve’s upcoming interest rate decisions.
ANZ analysts commented in a Monday note, “Even additional Fed rate cuts are unlikely to alleviate oil market concerns about weakening global economic growth and its impact on demand.”
Meanwhile, Beijing is set to host a conference this week, where Chinese policymakers are expected to outline economic strategies for 2025. However, recent data has shown China’s consumer inflation fell to a five-month low in November, and factory deflation persisted, indicating limited success in boosting domestic demand.
