Oil prices climb amid uncertainty in the Middle East

Image credit: Getty Images

Oil prices rose in early Asian trading on Monday, adding to last week’s gains after news came in of the Iranian president’s helicopter crash in the oil-producing nation. Additionally, reports of the US buying crude to help refill the national stockpile added to the price gain.

Brent rose 26 cents, or 0.3 per cent to $84.24 a barrel by 0049 GMT. US West Texas Intermediate crude (WTI) gained 15 cents, or 0.2 per cent to $80.21 a barrel.

Brent had ended the previous week up about 1 per cent, its first weekly gain in three weeks, while WTI rose 2 per cent on improved economic indicators from the US and China, the world’s largest oil consumers.

A helicopter carrying Iranian President Ebrahim Raisi crashed on Sunday, and he succumbed in the accident. Along with President Raisi, Foreign Minister Hossein Amirabdollahian, East Azerbaijan Governor Malik Rahmati, and Mohammed Ali Ale-Hashem, the Supreme Leader Ayatollah Ali Khamenei’s representative to East Azerbaijan, were also killed, reported Iranian news agencies such as Mehr and Tasnim.

Read: Iran’s President Ebrahim Raisi dies in helicopter crash

OPEC+ to meet on June 1 to discuss oil production

Despite the volatility in the region, oil prices moved only slightly.

“The oil market remains largely rangebound and without any fresh catalyst we will likely have to wait for clarity around OPEC+ output policy in order to break out of this range,” said Warren Patterson, head of commodities strategy at ING.

The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, are scheduled to meet on June 1.

“The market also appears increasingly numb to developments on the geopolitical front, likely due to the large amount of spare capacity OPEC is sitting on,” Patterson said.

The US government took advantage of the recent drop in oil prices, saying late last week it had bought 3.3 million barrels of oil at $79.38 a barrel to help refill its Strategic Petroleum Reserve after a massive sale from the stockpile in 2022.

Supporting the market last week, signs of easing inflation in the U.S. boosted expectations of interest rate cuts, which could decrease the value of the dollar and make oil cheaper for holders of other currencies.