Oil prices remained volatile Monday, after Friday's rally, as investors assess the Israel-Palestine conflict amid the US efforts to contain the tensions.
Brent crude futures inched up 0.02% to $90.9 per barrel as of 8:27 am GST after sliding 0.4% as of 4:48 am GST, while the US West Texas Intermediate (WTI) crude was up 0.03% at $87.7 a barrel around the same time after falling 0.5% earlier in the session.
Both benchmarks surged nearly 6% Friday, their highest daily gains since April, as investors factored in the possibility of a wider Middle East conflict. For the week, Brent saw a gain of 7.5%, while WTI surged by 5.9%.
US Secretary of State Antony Blinken returns to Israel Monday to talk "about the way forward" after several days of shuttle diplomacy between Arab states, including Iran and OPEC+ leader Saudi Arabia, in a frantic attempt to avert a wider crisis in the volatile region.
President Joe Biden is also considering a trip to Israel in the coming days.
Iran warned Saturday that there was a risk of conflict spreading if Israel continued its offensive.
"The impact that may involve oil-producing countries has been factored into the prices to some extent, but if an actual ground invasion [by Israel] were to occur and have an impact on oil supply, the prices could easily exceed $100 a barrel," said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, Reuters reported.
The International Energy Agency (IEA) said last week the ongoing Israel-Palestine conflict poses a limited risk of oil supply disruptions, but emphasized preparedness to take action if the situation escalates and necessitates intervention.
IEA expects global oil output to increase by 1.5 million barrels per day (bpd) this year and by 1.7 million bpd in 2024 to hit new record highs. The agency said this growth will be led by non-members of the expanded grouping of the Organization of the Petroleum Exporting Countries called OPEC+. Meanwhile, the announced voluntary output curtailment by Saudi Arabia and Russia will continue to cause supply shortages in the market, according to IEA.
The US moved last week to impose the first sanctions on owners of tankers carrying Russian oil priced above the G7's price cap of $60 per barrel, part of the mechanism designed to punish Moscow for its invasion of Ukraine. Russia is one of the world's top crude exporters.
