Against the backdrop of a production halt in Libya and increasing tensions in the Middle East, oil prices rose sharply on Monday.
West Texas Intermediate (CL=F) rose as much as 3 percent to trade above $77 per barrel, while Brent (BZ=F), the international benchmark, rose more than 2 percent to trade above $80 per barrel.
Over the weekend, Israel carried out an airstrike on missile launch sites of Tehran-backed Hezbollah in Lebanon, heightening fears that a larger conflict involving Iran could break out in the region.
“Rising tensions could trigger a military response from Iran, which, if it occurs, could slow global oil movements,” Dennis Kissler, senior vice president at BOK Financial, wrote in a note to clients on Monday.
In protest against the war between Israel and Hamas, the Iran-backed Houthi rebels have continued their attacks on ships in the Red Sea. A Greek oil tanker burned over the weekend after being attacked last week.
Prices also rose after Libya’s government in the east of the country announced it would temporarily halt production and exports in response to a dispute over the leadership of the Libyan central bank. Libya produced more than a million barrels of crude oil a day last month, according to IEA data.
“We have concerns about demand and those are deeply rooted in the markets right now,” Bob Iaccino, co-founder and chief market strategist at Path Trading Partners, told Yahoo Finance.
The price of oil has risen by more than 5% in the last three trading days.
Nevertheless, gasoline prices in the US have continued to decline since their peak in August.
The national average price of gasoline was about $3.35 per gallon, down $0.16 from a month ago and $0.47 from a year ago, according to AAA data.
“The trading world is not ready to push up the price of gasoline, especially as hurricane season in August will spare the Gulf of Mexico and the cooling of the Atlantic could reduce the chances of a tropical climate in September or October,” Tom Kloza, global head of energy analysis at OPIS, told Yahoo Finance on Monday.
Kloza noted that gasoline demand in the U.S. typically drops by 5 to 6 percent, or about 400,000 barrels per day, shortly after Labor Day. The oil market may also need to absorb more supply if the OPEC+ oil alliance does indeed proceed with its planned provision of additional crude supplies to the global market.
“The oil price increases on Thursday, Friday and today have likely halted the slow downward trend in retail gasoline prices, but we do not see enough strength to trigger a meaningful recovery,” Kloza said.
“I still believe we are looking at a fourth quarter in the U.S. that will bring the lowest pump prices for gasoline since 2021.”
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X at @ines_ferre.
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