Oil prices experienced a rebound in Asian trade on Tuesday, recovering from a previous drop of more than 3%, as concerns over supply disruptions due to the escalating conflict in the Middle East outweighed worries stemming from dismal economic data in China.
December Brent crude futures, set to expire on Tuesday, increased by 65 cents, or 0.74%, reaching $88.10 a barrel by 0637 GMT. The more heavily traded January Brent crude futures climbed 63 cents, or 0.73%, to $86.98, according to Reuters.
U.S. West Texas Intermediate crude also saw a rise of 67 cents, or 0.81%, reaching $82.98. The oil market had experienced a decline on Monday as investors adopted a cautious stance ahead of the upcoming U.S. Federal Reserve meeting, despite the intensification of Israel’s attacks on Gaza. Analysts noted that the situation in the Middle East remained uncertain, and market dynamics hinged on the possibility of Israel expanding its ground offensive, particularly if there was involvement from Iran.
If the United States strictly enforces sanctions again, lost supply could range between 500,000 barrels per day (bpd) and 1 million bpd. However, Middle East developments had yet to impact oil supply directly.
In China, concerns regarding slowing fuel demand were fueled by weaker-than-expected manufacturing and non-manufacturing activity data. The country’s official purchasing managers’ index fell below the 50-point level that separates contraction from expansion, raising fears about reduced fuel consumption in the world’s second-largest oil consumer.