Oil inches up as tension flares in Europe, Middle East

SINGAPORE – Oil prices inched up on Monday, supported by geopolitical tension in Europe and the Middle East, although the prospect of more oil supply and concern about the impact of trade tariffs on global fuel demand weighed.

Brent crude futures rose 28 cents, or 0.42%, to USD 66.96 a barrel by 0118 GMT while US West Texas Intermediate crude was at USD 62.88 a barrel, up 20 cents, or 0.32%.

“Reports over the weekend that Russia was threatening over the Polish border have provided traders with a timely reminder of the ongoing risks to European energy security from the north east,” said Michael McCarthy, CEO of investment platform Moomoo Australia and New Zealand.

Polish and allied aircraft were deployed early on Saturday to ensure the safety of Polish airspace after Russia launched airstrikes targeting western Ukraine near the border with Poland, armed forces of the NATO-member country said.

The deployment came after three Russian military jets violated NATO Estonia’s airspace for 12 minutes on Friday, while on Sunday, Germany’s air force reported that a Russian military plane entered neutral airspace over the Baltic Sea.

The United Nations Security Council is due to meet on Monday over Estonia’s accusation that Russian fighter jets violated its airspace, diplomats said.

In recent weeks, Ukraine stepped up drone attacks on Russia’s energy infrastructure, hitting terminals and refineries, while US President Donald Trump has urged the European Union to halt Russian oil and gas purchases.

In the Middle East news, four Western nations recognised a Palestinian state, prompting a furious response from Israel and adding to jitters in the key oil-producing region.

Brent and WTI settled down more than 1% on Friday to mark a slight decline last week as worries about large supplies and declining demand outweighed expectations that the year’s first interest-rate cut by the US Federal Reserve would trigger more consumption.

“There are underpinning assumptions about the market outlook that encompass increased supply from the USA, OPEC+ and now Russia in response to a significant decline in oil revenues,” McCarthy said.

Iraq has increased oil exports following the gradual unwinding of voluntary production cuts under an OPEC+ agreement, the country’s state oil marketer SOMO said on Sunday.

Iraq’s oil exports averaged 3.38 million barrels per day in August, according to the oil ministry. SOMO expects September’s average exports to range from 3.4 million to 3.45 million bpd.

(Reporting by Florence Tan; Editing by Christopher Cushing)