Oil edges higher following the changing political landscape in Syria

Crude oil futures edged higher, supported by rising geopolitical tensions in the Middle East following the changing political landscape in Syria.

The increased political instability risks raised concerns about potential disruptions to the region’s oil supply, providing some short-term bullish sentiment.

While geopolitical risk could offer support, the market’s overall sentiment remains cautious, limiting substantial upside in oil prices.

Saudi Aramco’s decision to reduce its prices for Asian buyers in January 2025 highlights the ongoing challenges posed by weak demand, especially from key markets like China. This move reinforces a bearish outlook for global crude prices in the medium term, indicating continued softness in demand. The price cuts, combined with broader economic uncertainties, suggest that unless geopolitical factors or unexpected supply disruptions emerge, the downside risks to crude prices may prevail.

The outlook for oil remains mixed as OPEC+ extends its production cuts until the end of 2026. While this decision aims to support the market during a period of weak global demand, especially from China, rising oil production from other regions, including the U.S., adds pressure on supply-demand dynamics.

However, as the Chinese government signaled its intention to implement a looser monetary policy, the market could look forward to a potential stronger Chinese economy and higher demand for oil as a result.