Oil steadies as Middle East tensions vie with Libyan supply outlook

Israel’s military said it has begun targeted raids against Hezbollah targets in southern Lebanon.

Oil steadied at the start of the fourth quarter as geopolitical risks in the Middle East, with Israel beginning ground raids inside Lebanon, vied with the prospects of a return of Libyan supply.

Brent for December traded near $72 a barrel after it ended Monday modestly higher, with West Texas Intermediate above $68. Israel’s military said it has begun targeted raids against Hezbollah targets in southern Lebanon. Libya is preparing to restore production after its two rival governments reached a compromise, according to people familiar with the situation.

The global crude benchmark plunged almost 17% last quarter, and is now lower year-to-date. Expectations that OPEC+ will make good on plans to bring back production, as well as a slowdown in China — even after massive stimulus was unveiled last week — have weighed on prices.

OPEC+ will hold an online monitoring meeting on Wednesday, as the alliance prepares to increase production. The group will start restoring supply in December and isn’t discussing any new proposals, Russian Deputy Prime Minister Alexander Novak said last week.

Israel had been stepping up its assault on Hezbollah in Lebanon since it killed the Iranian-backed group’s chief on Friday. Oil prices have so far not reacted to the escalation, with the production and transport of crude in the Middle East not affected by the hostilities.