Oil prices rose more than 1% on Monday amid concerns over supply disruptions due to escalating Russian-Ukrainian airstrikes and a weakening dollar.

Brent crude rose 83 cents, or 1.2%, to $68.31 a barrel at 12:15 GMT. U.S. West Texas Intermediate crude also rose 83 cents, or 1.3%, to $64.84. Trading is expected to be light due to a U.S. public holiday.

Brent and WTI crude recorded their first monthly declines in four months in August, falling 6% or more due to increased supply from the OPEC+ producer group.

"Crude oil fell in August and started September without a clear direction within its established range as concerns about a fourth-quarter oversupply were offset by geopolitical tensions," said Ole Hansen, head of commodity strategy at Saxo Bank. Investors are focused on Beijing, where Chinese President Xi Jinping, Russian President Vladimir Putin, and Indian Prime Minister Narendra Modi are attending a regional summit. The OPEC+ meeting on September 7 is also in the spotlight, Hansen added.

The market remains concerned about Russian oil flows, with weekly shipments from its ports dropping to a four-week low of 2.72 million barrels per day (bpd), according to tanker tracking data cited by ANZ analysts. Ukrainian President Volodymyr Zelenskiy on Sunday vowed to retaliate with more strikes deep inside Russia after Russian drone attacks on power facilities in northern and southern Ukraine. Both countries have intensified airstrikes in recent weeks, targeting energy infrastructure and disrupting Russian oil exports.

A Reuters poll on Friday showed that oil prices are unlikely to rise much from current levels this year, as rising production from major producers adds to the risk of a surplus and the threat of US tariffs weighs on demand growth. After the summer heat passes, oil inventories are expected to rise in the last quarter of 2025 and the first quarter of 2026, HSBC analysts said in a note, with a surplus of 1.6 million barrels per day in the fourth quarter.

Meanwhile, this week's US labor market report will provide insight into the health of the economy and test investors' confidence that interest rate cuts are imminent, a view that has bolstered appetite for riskier assets like commodities. Ahead of the data, the dollar hovered near a five-week low on Monday, making oil cheaper for buyers using other currencies. (alg)

Source: Reuters