Investing.com-- Oil prices settled higher Monday as waning concerns over the U.S. economy and ongoing Middle East geopolitical tensions offset a weaker global demand outlook.
At 14:30 ET (18:30 GMT), West Texas Intermediate crude futures gained 3.8% to $80.86 a barrel and Brent oil futures rose 2.9% to $81.92 a barrel.
Fears Iran response on Israel imminent
The prospect of supply disruptions in the Middle East as a result of rising geopolitical tensions continue to drive the risk premium in oil prices amid fears Iran could launch a retaliatory attack on Israel following the recent killing a senior Hamas leader in Tehran.
The US deployed fighter jets and navy warships to the Middle East to bolster Israel's ability to defend any potential attack.
Israeli intelligence reportedly believes Iran could launch a directg attack within days, Axio reported on Sunday.
Inflation readings awaited this week
Some recent encouraging U.S. economic data has also aided sentiment, with this being the fifth successive positive session, as traders bet that fears of a U.S. recession were overblown.
The focus this week will be on inflation readings from a string of major economies this week, most notably the U.S.
U.S. consumer price index inflation is due on Wednesday, and is expected to show some cooling in inflation through July - which bodes well for expectations of interest rate cuts in September.
CPI data from major oil importer India slowed slightly earlier Monday, while CPI data from the UK is due on Wednesday.
Before last week, oil prices were nursing four straight weeks of losses amid fears of slowing economic growth, especially in top oil consumers the U.S. and China.
OPEC cuts 2024 crude demand growth forecast
Monday's gains came despite the Organization of the Petroleum Exporting Countries cutting its forecast for global oil demand growth this year, citing weakness in China, the world’s largest crude importer.
OPEC said, in a monthly report, that world oil demand will rise by 2.11 million barrels per day in 2024, down from growth of 2.25 million bpd expected last month.
"This slight revision reflects actual data received for the first quarter of 2024 and in some cases for the second quarter, as well as softening expectations for China's oil demand growth in 2024," OPEC said in the report.
"Despite the slow start to the summer driving season compared to the previous year, transport fuel demand is expected to remain solid due to healthy road and air mobility."
This is the first reduction in OPEC's 2024 forecast since it was first made in July 2023.
The International Energy Agency releases its monthly report this week as well, and tends to be more bearish than the producer group.
The IEA saw demand growth of 970,000 bpd this year at its last report.
(Peter Nurse, Ambar Warrick contributed to this article.)