Oil futures struggle in key range, with bullish breakout contingent on Middle East developments.

Crude oil prices closed last week with a 4.5% gain, ending at $71.78, as heightened geopolitical risks, a stronger U.S. dollar, and weak demand indicators from China shaped market sentiment. The market's movement reflects a tug-of-war between potential Middle Eastern supply risks and bearish factors such as rising U.S. crude inventories and sluggish Chinese demand.

Geopolitical instability stemming from the escalating Israel-Iran conflict provided significant support to crude prices. Following an October 1 missile strike from Iran, Israel conducted retaliatory airstrikes targeting Iranian military sites, which raised alarms in the oil market over potential regional spillover. Although oil infrastructure was spared, the risk of conflict disrupting supply routes through critical areas like the Strait of Hormuz remains. Analysts view any escalation here as potentially significant for global oil supply, supporting a premium on crude prices despite underlying bearish indicators.