• WTI prices extend losing streak to six-month low
• The decline in oil prices may be restricted due to growing supply concerns.
• US Secretary of State Tony Blinken said Iran and Hezbollah could attack Israel as early as Monday.

West Texas Intermediate (WTI) crude oil is trading around $73.10 a barrel, having extended losses to six-month lows on Monday. However, the decline in oil prices may be restricted due to rising supply risks stemming from geopolitical tensions in the Middle East.

Oil prices have received a boost from the ongoing conflict in the Gaza Strip, and an Israeli airstrike hit two schools and caused at least 30 casualties on Sunday, according to Palestinian officials. The escalation comes after a round of talks in Cairo ended without progress, Reuters reported.

Israel and the United States are bracing for a potential escalation in the region after Iran and its allies, Hamas and Hezbollah, pledged to retaliate against Israel for the killing of a Hamas leader. U.S. Secretary of State Tony Blinken said Sunday that Iran and Hezbollah could attack Israel as early as Monday, according to three sources briefed on the conversation, Axios reported.

Read more: US Secretary of State Blinken tells G7 that Iran-Hezbollah attack on Israel could begin on Monday

Oil prices fell on growing recession fears in the United States, the world’s largest consumer of oil. The decline was helped by disappointing U.S. jobs data on Friday and a bigger-than-expected reduction in factory activity, according to the ISM Manufacturing PMI.

The number of nonfarm payroll workers (NFP) in the U.S. rose by 114,000 in July from 179,000 in the previous month, revised down from 206,000. Data released Friday showed that the number was weaker than expected at 175,000. Meanwhile, the U.S. unemployment rate rose to its highest level since November 2021, rising to 4.3% in July from 4.1% in June. The Purchasing Managers Index (PMI) for the U.S. manufacturing sector fell to an eight-month low of 46.8 in July.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia (OPEC+), are sticking to their plan to gradually end voluntary production cuts starting in October. Still, a Reuters poll released on Friday showed OPEC oil production rose in July, even with the group’s production cuts.