Onome Amuge
Crude oil prices advanced into bullish territory on Monday, lifted by concerns over potential supply disruptions from the war in Ukraine and a weaker US dollar, though muted trading volumes and expectations of rising OPEC+ output capped gains.
Global benchmark Brent settled one per cent higher at $68.15 a barrel, up 67 cents on the day. West Texas Intermediate, the US marker, also gained 1.1 per cent to $64.68. Trading in WTI was thin, however, with no settlement due to the Labor Day holiday in the United States.
The gains came as Ukrainian President Volodymyr Zelensky vowed retaliatory action against Russian drone strikes on power infrastructure over the weekend, ordering new long-range assaults inside Russia. More than three years into the conflict, both Moscow and Kyiv have stepped up air campaigns, fuelling unease in energy markets about the resilience of Russian supply.
Russian seaborne crude exports fell to a four-week low of 2.72 million barrels per day last week, according to tanker-tracking data cited by ANZ. While overall flows remain steady relative to the war’s earlier phases, even modest signs of tightening supply have tended to trigger price responses given Russia’s role as one of the world’s largest oil exporters.
Oil was also buoyed by broader macroeconomic sentiment. The dollar, which has declined toward a five-week low, made dollar-denominated crude cheaper for holders of other currencies. Investors are awaiting US labour market data later this week, which is expected to shape expectations on Federal Reserve rate cuts and, by extension, risk appetite in commodity markets.
In Asia, commodity sentiment was helped by signs of resilience in China, where a private survey showed manufacturing activity expanded at its fastest pace in five months in August. “That gave oil and industrial metals some support as it helped ease immediate demand concerns,” said SEB commodities analyst Bjarne Schieldrop.
Markets are now looking ahead to an OPEC+ meeting on September 7, where the producer group will decide whether to extend output increases beyond September. Analysts are divided on the outcome. Tim Evans of Evans on Energy said the decision would be the next key fundamental question, noting that an extension of higher quotas could reinforce downside pressure if demand softens further.
Oil prices last month recorded their first monthly decline in four months, with both Brent and WTI falling more than 6 per cent in August. HSBC analysts forecast that inventories will build in the final quarter of 2025 and into early 2026, projecting a surplus of 1.6mn barrels per day.
“Oil practitioners will continue to curb their enthusiasm,” said PVM analyst John Evans, citing both the prospect of higher OPEC+ output and seasonal inventory builds.
Still, geopolitical tensions remain the most immediate driver. While the Russia-Ukraine war has yet to trigger sustained supply shortages, the increased tempo of attacks on energy-linked targets has left traders cautious.
