Oil Prices Go Up As Syrian President's Loss of Power Creates Uncertainty in the Middle East
Oil Prices Go Up As Syrian President’s Loss of Power Creates Uncertainty in the Middle East
Oil prices went up slightly in afternoon trading on Monday in Asia because the fall of Syrian President Bashar al-Assad’s government raised worries about uncertainty in the Middle East.
Oil Prices Rise Slightly
West Texas Intermediate (WTI) crude oil went up by 1.2%, reaching $68 per barrel by 12:48 pm AST on Monday, while Brent crude increased by 1% to $71.90 per barrel at the same time.
However, the price increases were limited because of weaker global demand expected in 2025, according to Reuters.
On Sunday, Syrian rebels announced on national TV that they had overthrown President Bashar al-Assad, ending his 50-year rule. This sudden change raised concerns about more political instability in the Middle East, already affected by the ongoing Israel-Palestine conflict.
“The situation in Syria adds more political uncertainty in the region, which is supporting oil prices,” said Tomomichi Akuta, a senior economist at Mitsubishi UFJ Research and Consulting.
“But Saudi Arabia’s price cuts and the extension of OPEC+’s production cuts last week highlight weak demand from China, which could make the market soften towards the end of the year,” he added. Investors are also watching for signs of how US President Donald Trump’s future energy and Middle East policies might impact the oil market.
Over the weekend, Saudi Aramco, the state-owned oil company, said it had reduced its oil prices for Asian buyers in January 2025 to the lowest level since early 2021, mainly due to weak demand from China, the world’s largest oil importer.
OPEC+ Output Policy
Last Thursday, OPEC (the Organization of Petroleum Exporting Countries) and its allies (OPEC+) agreed to delay planned increases in oil production by three months, now set for April 2025. They also decided to push back their plan to slowly reduce production cuts by a year, until the end of 2026.
The oil-producing countries agreed to extend their extra voluntary supply cuts of 1.6 million barrels per day (bpd), which were announced in April 2023, until December 2026. This is aimed at stabilizing the global oil market, which has concerns about too much oil being available. They also agreed to continue their other voluntary supply cut of 2.2 million bpd, announced in November 2023, until the end of March 2025.
Published: 9th December 2024
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