Oil prices eased during early hour on Monday amidst uncertainties in the global commodities market, fueled by geopolitical tensions in the Middle East.

Brent crude declined to $77.62 per barrel. West Texas Intermediate (WTI), the American benchmark, traded at $74.03 a barrel.

Last week, the Brent contract gained over 8% on a weekly basis and the most in a week since January 2023, while the WTI contract gained 9.1% week-on-week, the most since March 2023.

The market awaits new developments in the Middle East as US President Joe Biden is reportedly discouraging Israel from planning a strike on Iran’s crude oil facilities.

The direct involvement of Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), in Middle East tension raised the prospect of disruptions to oil supplies.

According to OPEC’s latest monthly oil report, the country produced 3.3 million barrels per day in August. Meanwhile, data from the US Energy Information Administration (EIA) released late Wednesday tampered further price hike.

US commercial crude oil inventories increased by around 3.9 million barrels during the week ending Sept. 27, against the market prediction of a 1.5 million barrels draw. Gasoline inventories also rose by about 1.1 million barrels during the same period.

The data put downward pressure on prices by easing supply disruption worries.

According to OPEC’s latest monthly oil market report, Iran has been producing around 3.3 million barrels of crude oil per day and any disruption to this supply could create shortages in the oil market.

Saudi Arabia raised its Official Selling Prices (OSP) for buyers in Asia for November loadings while trimming prices for European and US buyers. For its Arab Light crude oil, Aramco raised the premiums by US$0.90/bbl for Asian buyers to US$2.2/bbl.

The market expected a smaller increment of around US$0.65/bbl, ING said in a note. Meanwhile, OSPs for all grades to Europe saw cuts of US$0.9/bbl for November loadings, ING analyst said this possibly an effort to regain market share in the European market.

According to ING, The divergent price views for different regions may also hint at expectations of local imbalances in the oil market. In the US, Drilling activity remained weak over the last week.

The latest rig data from Baker Hughes shows that the number of active US oil rigs decreased by five over the week to 479, the lowest since mid-July, according to analysts note.

The total rig count (oil and gas combined) stood at 585 over the reporting week, down from 587 a week earlier. This was also lower compared to the 619 rigs seen this time last year.

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