Oil prices rose on Monday, fueled by heightened geopolitical tensions in the Middle East, raising fears about the region's oil supplies.
The industry's outlook, however, remained uncertain due to the uncertainties surrounding OPEC+ voluntary output cuts and the changing global fuel demand environment.
As of 00:18 GMT, West Texas Intermediate crude prices in the United States were up 0.4%, or 29 cents, to $74.36 per barrel.
Simultaneously, Brent crude futures gained 0.4%, climbing 28 cents to $79.16 per barrel.
The market's reaction shows the delicate balance between geopolitical variables influencing supply dynamics and persistent concerns surrounding production agreements and global fuel demand.
Investors are keeping a close eye on developments in the Middle East and calculating the consequences for the global oil market.
"A re-emergence of geopolitical tension over the weekend has come to the aid of an ailing crude oil price on the reopen this morning," IG markets analyst Tony Sycamore said.
"Simmering tensions appear to be rising to the surface again in the Middle East, in response to Israel's renewed attacks in Gaza."
The U.S. military said over the weekend that fighting had restarted in Gaza and that three commercial vessels had been attacked in international waters in the southern Red Sea. The Houthi group in Yemen had also claimed drone and missile assaults on two Israeli vessels in the vicinity.
The Israel-Hamas conflict's resumption, according to CMC Markets analyst Tina Teng, fueled the bullish trend for oil prices.
"However, oil prices may continue to be under pressure for the time being due to China's disappointing economic recovery and the ramp-up of U.S. production," Teng said.
Energy services company Baker Hughes (BKR.O) reported in its widely watched report on Friday that the number of oil rigs in the United States increased by five to 505 this week, the highest number since September.
Oil prices are beginning to rise again after falling more than 2% the previous week due to investor scepticism on the extent of supply cuts by OPEC+, an alliance that includes Russia, and worries about slowing global manufacturing.
"Prices will likely remain volatile and potentially directionless until the market sees clear data points pertaining to the voluntary output cuts," RBC Capital analysts including Mike Tran said in a note, adding that such data will be available only two months later.
Western nations have intensified their efforts to enforce the price restriction of $60 per barrel on Russian oil supplies by sea, which was set as retaliation against Moscow for its war in Ukraine.
Washington further sanctioned three organisations and three oil vessels on Friday.
Regarding Venezuela, an OPEC member, the White House warned on Friday that it was ready to "pause" sanctions relief in the coming days unless progress was made in freeing political prisoners in Venezuela and "wrongfully detained" Americans. India has started buying oil from Venezuela again in the interim.