Tokyo: Oil prices rose on Monday following the ousting of Syrian President Bashar al-Assad, which added new uncertainty to the Middle East. However, the gains were limited by a dimmer demand outlook for the coming year.

Brent crude futures increased by 36 cents, or 0.51%, reaching $71.48 per barrel by 0513 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures gained 38 cents, or 0.57%, to $67.58 per barrel.

Syrian rebels declared on Sunday that they had overthrown President al-Assad, ending a 50-year family dynasty in a swift offensive that raised concerns of further instability in a region already struggling with conflict.

"The situation in Syria has added another layer of political uncertainty in the Middle East, which has provided some support to the market," said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting. "However, Saudi Arabia's price cuts and OPEC+'s decision to extend production cuts last week highlight weak demand from China, signaling the market may soften as the year ends."

Saudi Aramco, the world’s largest crude oil exporter, announced a reduction in its January 2025 prices for Asian customers to the lowest level since early 2021, citing weak demand from China.

Last week, OPEC+ extended the timeline for unwinding production cuts until April 2024 and pushed back the full phase-out of cuts until the end of 2026. Originally, the group, which produces about half of the world's oil, planned to begin increasing output in October 2024, but slowing global demand, especially from China, and rising output elsewhere forced them to delay the plan multiple times.

Meanwhile, the U.S. oil and gas rig count reached its highest level since mid-September, indicating rising output from the world’s largest crude producer.

With concerns of a supply surplus in the coming year, both Brent and WTI experienced losses over the past two weeks. As prices fell, money managers increased their net long positions in U.S. crude futures and options for the week ending Dec. 3, according to the U.S. Commodity Futures Trading Commission.

This week, investors are preparing for a heavy flow of economic data, including a crucial U.S. inflation report on Wednesday, which may offer insights into the Federal Reserve’s future interest rate plans.

ANZ analysts noted that even with potential Fed rate cuts, oil market concerns about weakening global economic growth and its effect on demand are unlikely to ease.

In China, consumer inflation dropped to a five-month low in November, and factory deflation persisted, according to data released Monday. This suggests that efforts to boost economic demand are having limited success, ahead of a major conference this week where Chinese policymakers are expected to outline the nation’s economic strategy for 2025.