Oil prices have stabilized close to their highest level in almost three months, driven by an increase in demand for specific Middle Eastern oil grades from Asian refiners.

Brent crude prices remained around $76 per barrel, marking its highest point since October 14 earlier on Monday. In comparison, West Texas Intermediate stood at about $74. Market watchers are eagerly awaiting the official selling prices from Saudi Arabia, the foremost exporter, especially after Oman and Dubai crude prices surged at the end of last year due to tight supply from Iran and Russia.

As per Warren Patterson, the head of commodities strategy at ING Groep NV, oil prices “appear to be shaped by the physical market conditions in the Middle East.” He further noted, “Reduced supplies from Iran and Russia have pushed Asian buyers to look for alternative sources.”

Last week, factors such as decreasing US stockpiles and the rising uncertainty around Donald Trump’s potential return to the White House provided support for oil prices, breaking them out of a narrow trading range that had lasted since mid-October. Nevertheless, this optimism is being dampened by concerns regarding a possible surplus, a potential revival of paused OPEC+ production, and lackluster demand from China, the leading importer.

In a note from January 5, Morgan Stanley analysts, including Martijn Rats, indicated that Brent crude is “expected to stabilize around $70.” They foresee a surplus of around 700,000 barrels per day this year, as increasing supply from both OPEC and non-OPEC producers outpaces demand growth.

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