By Duygu Alhan
Oil prices continued to climb on Monday, buoyed by better-than-expected US employment data. However, statements from US President Joe Biden deterring Israel from targeting Iranian oil fields have capped further price movements.
International benchmark Brent crude rose 0.78% to $78.49 per barrel as of 10.43 am local time (0743 GMT), up from the previous session’s close of $77.88. Meanwhile, US benchmark West Texas Intermediate (WTI) increased 0.94%, reaching $74.76 per barrel, after closing at $74.06 in the prior session.
The surge in prices follows stronger-than-expected employment figures in the US, the world’s largest oil consumer. Non-farm payrolls increased by 254,000 in September, exceeding market expectations, while the unemployment rate dropped from 4.2% to 4.1%. This improvement in the labor market has heightened risk appetite in global markets.
Last month’s employment growth was the strongest in six months, and the unemployment rate hit its lowest level in three months.
Chicago Federal Reserve President Austan Goolsbee welcomed the news, pointing to the end of the dockworkers' strike as a positive signal for the US economy. However, uncertainty surrounding the Federal Reserve’s next move continues to influence oil prices. Goolsbee noted that most Fed policymakers expect interest rates to decline significantly next year. It is widely anticipated that the Fed will reduce rates by 25 basis points in November.
A potential rate cut is expected to weaken the dollar against other currencies, thereby increasing demand for oil.
Meanwhile, on Oct. 3, President Biden said that the US and Israel were discussing possible strikes on Iranian oil facilities after Tehran launched nearly 200 ballistic missiles at Israel, pushing oil prices upward. However, Biden’s subsequent comments on Oct. 4, discouraging Israel from targeting Iranian oil fields, tempered the price rally.
“If I were in their shoes, I’d be considering other alternatives than striking oil fields,” Biden told reporters at the White House.