Investing.com — Oil prices edged lower Monday, on track to fall for the third consecutive month on concerns over slowing demand growth despite raised Middle East tensions.

By 07:55 ET (11.55 GMT), the futures traded 0.5% lower at $67.87 a barrel and the contract dropped 0.3% to $71.32 a barrel. 

Little impact from raised Middle East tensions

The crude market initially traded higher Monday after Israel escalated attacks on Hezbollah and Hamas leaders in Lebanon over the weekend, raising the potential that Iran, a key oil producer and a backer of both groups, may be directly drawn into a widening Middle East conflict.

However, these early gains, based on fears of a disruption to global supplies, have quickly dissipated. 

“The market has become increasingly numb to the tension in the region given that, after almost a year of conflict, there has still been no impact on oil production,” said analysts at ING, in a note. “However, if Iran were to become more involved, this would increase the risk of oil supply disruptions.”

Uncertainty over China’s economy 

Prices have been hit hard this month on concerns that a slowing global economy, and the Chinese economy in particular, will lead to weaker demand going forward than had been previously expected.

Both the Organization of Petroleum Exporting Countries and the International Energy Agency have recently cut their forecasts for 2024 oil demand, citing slower Chinese demand.

Data released Monday showed that China’s manufacturing activity shrank for a fifth straight month and the services sector slowed sharply in September.

This suggests that Beijing will have to do more to boost the world’s second-biggest economy and top oil importer, even after last week’s announcement of a series of stimulus measures.

Brent was on track to lose almost 10% month-on-month, which would be its biggest decline since November 2022, while the WTI contract was set to decline more than 8%. 

OPEC+ set to meet this week

The members of OPEC and allies, a group widely known as OPEC+, will hold its Joint Ministerial Monitoring Committee meeting on Wednesday. 

Currently, OPEC+ is cutting output by 5.86 million bpd, or about 5.7% of global demand, and earlier this month, the group delayed its plan to boost output after oil prices hit a nine-month low.

“With the group having agreed on production targets through until the end of November, it is unlikely that the JMMC will recommend any large shift in policy,” ING added.